Friday, December 19, 2008

Mortgage Transaction Glossary

Now is absolutely one of the best times to purchase or refinance a home in the past two years. In spite of the gloom and doom talk about the stock market and our impending economic crisis, if you’ve even had a passing thought about buying or refinancing, you should at least check it out.
Rates are very low and there are some really good housing buys that have been on the market for several months and the sellers are ready to make a deal. So in anticipation of more people applying for home loans, I offer a brief glossary of mortgage terms. It is my hope that these definitions will help you understand the process a bit better.

Annual Percentage Rate (APR): This is a measure of the cost of credit, expressed as a yearly rate. It includes interest as well as other charges. Because all lenders, by federal law, follow the same rules to ensure the accuracy of the annual percentage rate, it provides consumers with a good basis for comparing the cost associated with various loans. The APR is a higher rate than the simple interest of the mortgage.

Automated Underwriting: Is loan processing completed by the mortgage provider through a computer-based system that evaluates past credit history to determine if a loan should be approved. This system effectively removes the possibility of personal bias against the buyer.

Broker: a licensed individual or firm that charges a fee to the borrower and serves as the mediator between the buyer/borrower and seller. Mortgage brokers are in the business of arranging financing for a client, but who does not loan the money.

Certificate of Title: This document is provided by a title company, and shows that the property legally belongs to the current owner; before the title is transferred at closing, it should be clear and free of all liens or other claims.

Debt-to-Income Ratio: a comparison or ratio of gross income to housing and non-housing expenses; With the FHA/VA loans, the-monthly mortgage payment should be no more than 29% of monthly gross income (before taxes) and the mortgage payment combined with non-housing debts should not exceed 41% of income. For conventional loans, (non-government mortgages) the ratio’s can be higher. In all cases the presence of significant cash reserves can allow for higher debt to income ratios.

Deed-in-Lieu: in order to avoid foreclosure ("in lieu" of foreclosure), a deed is given to the lender to fulfill the obligation to repay the debt. This process does not allow the borrower to remain in the house but helps avoid the costs, time, and effort associated with foreclosure.

Discount Point: normally paid at closing and generally calculated to be equivalent to 1% of the total loan amount, discount points are paid to reduce the interest rate on a loan.
Document Recording: after closing on a loan, certain documents are filed in the county where the property is located and made public record. Discharges for the previous mortgage holder are filed first. Then the deed is filed with the new owner's and mortgage company's names.

Escrow: are funds held in an account and used by the lender to pay the home owner’s property insurance and property taxes. The funds may also be held by a third party (usually a title company) until any contractual conditions are met and then paid out.

FICO Score: FICO is an abbreviation for Fair Isaac Corporation and refers to a person's credit score. Lenders and credit card companies use the number to decide if the person is likely to pay his or her bills. An individual’s credit score is evaluated using information from the three major credit bureaus and is usually between 300 and 850.

Good Faith Estimate: an estimate of all closing fees including pre-paid and escrow items as well as lender charges; must be given to the borrower within three days after submission of a loan application.

HECM (Reverse Mortgage): the reverse mortgage is used by senior homeowners age 62 and older to convert the equity in their home into monthly streams of income and/or a line of credit to be repaid when they no longer occupy the home. A lending institution such as a mortgage lender, bank, credit union or savings and loan association funds the FHA insured loan, commonly known as HECM.

HUD1 Statement: may also known as the "settlement sheet," or "closing statement". This form itemizes all closing costs and must be given to the borrower at or before closing. Items that appear on the statement include real estate commissions, loan fees, discount points, and escrow amounts.

Joint Tenancy (with Rights of Survivorship): this is one way title to a property may be held. This term describes two or more owners who share equal ownership and rights to the property. If a joint owner dies, his or her share of the property passes to the other owners, without probate.

Loan to Value (LTV) Ratio: is a percentage calculated by dividing the amount borrowed by the price or appraised value of the home. The higher the LTV, the less cash a borrower is required to pay as down payment.

Mortgage: is a lien on the property that secures the Borrower’s promise to repay a loan. It is a security agreement between the lender and the buyer in which the property serves as collateral for the loan. The mortgage gives the lender the right to collect payment on the loan and to foreclose if the loan obligations are not met.

Mortgage Insurance: is a policy that protects lenders against some or most of the losses that can occur when a borrower defaults on a mortgage loan. Mortgage insurance is required primarily for borrowers with an LTV greater than 80% of the home's appraised value. The cost of mortgage insurance is usually added to the monthly payment and is maintained on conventional loans until the outstanding amount of the loan is less than 80 percent of the value of the house.

Negative Amortization: the term “amortization” means that monthly payments are large enough to pay the interest and reduce the principal on your mortgage. Negative amortization occurs when the monthly payments do not cover all of the interest cost.

Origination: the process of preparing, submitting, and evaluating a loan application. This process generally includes a credit check, verification of employment, and a property appraisal.

Quitclaim Deed: a deed transferring ownership of a property but does not make any guarantee of clear title. May be used to add or delete ownership of a property.

Survey: a property diagram that indicates legal boundaries, easements, encroachments, rights of way, improvement locations, etc. Borrowers receive a copy of this diagram at time of closing.

Title Insurance: is insurance issued by the title company that protects the lender against any claims that may arise from arguments about ownership of the property. An insurance policy guaranteeing the accuracy of a title search protecting against errors.

Truth-in-Lending: a federal law obligating a lender to give full written disclosure of all fees, terms. This information is provided on a form that bears the same name; also referred to as the TIL.

Underwriting: is a process performed by a human and includes the analysis of all loan documents in order to determine the potential risk involved in making the loan.

Warranty Deed: a legal document that includes the guarantee that the seller is the true owner of the property and has the right to sell the property and there are no claims against the property.

I hope these definitions prove helpful to anyone in the market to purchase or refinance a home. If you are currently in that process, congratulations! If you are not, perhaps you should be. Now is a great time to buy or refinance a home.

Friday, December 5, 2008

Help for Home Owners?

$700 Billion, $300 Billion, $25 Billion, it seems that there is no end to the line of industry leaders standing before congress with their hands out. The banks got theirs and held onto it while others took advantage of the financial redistribution without making any changes to their business extravagance.

It's been several months now since the launch of the bail-out, and the only change we've seen in the news that impacts you and me is that it's gotten worse. More jobs lost, continued foreclosures and less money spent on Christmas shopping.

I like our economy and believe appropriate actions should be taken by our government to protect it. But isn't it time something is done to help those of us who work hard every day just to support our families and pay our mortgages? Yes steps must be taken to protect jobs and stem the rising tide of unemployment. But the answer is more specific than "bailing out" or "lending out" financial institutions, automakers, and no telling who else. It's time for a specific action plan to address issues that live on my street and your street.

In recent days there has been talk on "the hill" of making really cheap money available for homeowners. Just how cheap? How about 4.5% fixed for thirty? We haven't seen rates that low since the early 1960's.

Rates that low could make a significant difference in monthly payments. For example, a $125,000 30 year fixed mortgage at 6.5% would have a monthly payment of $790.08. That same amount financed for 30 years at 4.5% would have a monthly payment of $633.35, that's a monthly savings of $156.73 or $1880.76 per year!
So where does one line up for these great rates? Well, not so fast buster. You see this is still just in the "talking" stage. And there are no guarantees that any substance will emerge out of all this talk.

In fact dig deeper into the rhetoric and you'll find the consumers targeted for these historically low rates are new home purchasers. That's right, current intent is to make these rates available only to consumers purchasing homes, leaving the rest of us who already own a home out of the loop.

The national board of Realtors is pushing hard to get this legislation approved. They believe that the best way to protect our economy is to shore up home values, and the best way to do this is to reduce existing inventory. In their mind it's the law of supply and demand; fewer available homes translates into a stabilization of existing home values.

Okay, maybe this is true. But stabilizing home values does little to help slow the increasing number of foreclosures. And every family losing their home to foreclosure is one more family that finds themselves prohibited from buying a new home for up to 5 years.

It's time that some of these monies be used to help those who want to purchase new homes become responsible home owners. It's also time for some of these funds to be appropriated in ways that help home owners struggling to make their payments refinance to a low fixed rate they can afford. These are not easy answers with "point and click" applications pre-made, ready to un-box and implement.

There will be difficult decisions with equally problematic clarifications that will have to be made. But can these issues really be more complex than what we are already facing? For months leading up to the Presidential election we heard speeches about the importance of implementing new financial policies to protect Wall Street as well as Main Street. Well, we've seen Billions of dollars funneled into companies represented by cryptic symbols on Wall Street. And the effect of this cash infusion has done little to address the needs of Main Street.

I say if the government is going to make 4.5% available to consumers they should make it available for both purchases as well as refinances. And for those consumers who are already having difficulty making their monthly house payments, there should be a plan in place where they can find a workable solution with their current lender to renegotiate their existing mortgage into a rate and payment they can live with.

Friday, November 21, 2008

Anatomy of a V.A. Loan

I don’t know if it’s in response to the recent celebration of Veteran’s Day or what, but I’ve been working more V.A. loans than usual. I actually like providing these safe, secure, and easy to qualify for loans to Veterans. If you know a Veteran the information in this article could prove helpful to them.

Just what is a V.A. loan? It is a guaranteed loan made by private lenders to eligible veterans for the purchase or refinance of a home. If the loan is approved (and most of them are), the V.A. will guarantee a portion of it to the lender. If the Veteran has never used his/her entitlement before, or, has previously used it for a home which has been sold and the loan paid in full, then he/she has full entitlement available and can apply for maximum V.A. funding.

Currently the V.A. maximum purchase loan amount is $417,000 which equals current conventional conforming loan limits. In December 2004, V.A. guidelines were modified so the maximum entitlement will index and increase accordingly with conforming loan limits, therefore always equaling 25% of the current conforming limit.

Requirements for V.A. home loan approval are simple. 1) Applicant must be an eligible Veteran who has available entitlement; 2) The Veteran must occupy the property as their primary residence. That’s it.

V.A. loans can be used to purchase a home and even multi-family homes up to 4 family units for one Veteran, including townhouses or condos in a V.A. approved project. The loan can also be used to build a home or refinance an existing home to take cash-out, reduce the interest rate (“IRRRL”) or convert and adjustable rate mortgage to a fixed rate mortgage.

Some of the advantages the V.A. loan provides the Veteran are: 1) 100% financing – no down payment; 2) No cash reserves required; 3) More leniency on derogatory credit; 4) Sellers can contribute up to 4% of the purchase price toward Veteran’s closing costs; 5) No monthly mortgage insurance; 6) Low interest rates – in most cases near conforming levels.

One thing many Veterans are surprised to learn about is the up-front funding fee associated with every V.A. loan. The funding fee is a one-time, up-front charge applied as a percentage to the “base loan amount”. The funding fee may be financed into the loan provided the entire loan amount does not exceed current limits of $417,000.

A Veteran purchasing a home who has never used their eligibility is charged a 2.15% funding fee. The percentage of subsequent entitlement usage is 3.35%. The percentages are slightly higher for Reservists and National Guard Veterans. The same percentages apply to first time and subsequent cash-out refinance loans. But if the Veteran is simply reducing the interest rate on their home loan the up-front funding fee is only .50% and if the Veteran receives V.A. disability benefits, then the funding-fee is waived for all home loan transactions.

If you need a copy of your certificate of eligibility there are two ways to get it. The quickest and easiest way is to meet with your mortgage lender. In most cases when Veterans come to my office, I am able to access their certificate on-line in a matter of minutes and there is no charge for this service. On the rare occasion when the certificate is not available on-line I can provide the form the Veteran must complete and mail to the Department of Veteran Affairs Eligibility Center P.O. Box 20729 Winston-Salem, NC 27120.

For a comprehensive government website please go to:

Which is Better? A Will or a Trust?

His cell phone rang and he pulled it out of his pocket. Before pressing the green button he checked the display to see who was calling. “MOM.” He pressed the send/end button, “Hey You!” he said, giving her the greeting she had grown accustomed to. “What are you doing?” Her usual response was “Oh, nothing. Just coming home from…” She was always coming or going somewhere. But this call was different. She sniffled and called him by the name every mother calls her son when the purpose of the call was serious, “Son.” He braced himself. “Your Uncle Joe is gone.”

Uncle Joe had been in the hospital for several weeks and his condition had steadily declined. Uncle Joe’s wife had died several years earlier and Joe had lived alone supported by the daily phone calls and irregular visits from the three children. The next visit the kids made would be to a house filled with stuff but missing its most important asset, the occupants who had made the house a home.

The children got along well enough, but then each one had their own idea of how best the “stuff” could and should be distributed. To further complicate matters, no one was quite sure whether their dad had drawn up a will or if he had used a trust. They knew their father had drawn up some papers shortly after their mother’s death, but they didn’t know what type of documents to expect. He had put the papers in the safe deposit box at the bank but it was Saturday evening and they wouldn’t have access to the papers until Monday morning.

This kind of suspense does no one any good. So to help my readers avoid undue stress and to answer some of the questions that surround the differences between these two legal instruments, I spoke with Richard Harris of the Oklahoma City firm Walls, Walker, Harris, & Wolfe ( “Regardless of the instrument chosen, the most important thing is to communicate with your loved ones where these documents are stored and the name, if any, of the attorney who will be overseeing the distribution process” says Harris. “It can be very disturbing to the heirs when they walk into a meeting expecting a will but being told that a trust was prepared.”

A will is the most common document used to convey ownership of property or assets to the heirs. Wills can be prepared by an attorney for around $500.00. Self-help will packets can be purchased on-line for even less. “Extreme care should be exercised” Harris says, “before this type of document is chosen. Although many of these sites say they are legal in your state, the requirements for a valid will vary from state to state, and it’s always a good idea to have an attorney review the will to make sure everything is in order and that your last wishes are fully and properly stated.”

Using a will can cost less up front than a trust, but almost always costs significantly more in attorney fees down the road. In most situations a will must be probated. This requires hearings in front of a judge, newspaper notices and a public inventory of your assets at the time of death. A trust bypasses probate altogether.

Preparing a trust may seem more costly up front ($2,000 plus) when compared with a will, but administering the trust typically incurs fewer attorney fees than does the execution of a will. Choosing which instrument is better for your circumstances will require you to do some research or perhaps seek the counsel of an estate planning attorney.

Talk with a trusted friend or co-worker who has already prepared their will or trust. Ask them how they made their decision. Then contact an estate planning attorney and take an hour to discuss your specific situation. Most attorneys, including Richard Harris, provide these consultations at no charge. Once you make up your mind which instrument is in your best interest, communicate your choice with your loved ones. You and your family will be glad you did.

(Trey Bowden is a licensed Mortgage Professional in Edmond)

Friday, October 10, 2008

Now Is a Great Time to Buy a Home

Even my optimism has been challenged over the past two weeks. Between the hate crimes being alleged in almost every political advertisement and the cries for financial bailout coming out of Washington, I’m on information overload. I view my responsibility in this weekly article to be both informative and instructional. This week I will do my best to fulfill both mandates.

At the risk of appearing like the ruler in the classic tale, “The Emperor’s New Clothes” I offer this article filled with positive information and encouragement to help my readers feel good about their investments in the Edmond, OKC metro housing markets. I also hope to motivate others who are standing on the edge of the housing pool for fear that the water is not deep enough. Jump in, the water’s fine. And if you’re already in, don’t panic.

Housing Inventory. There are plenty of great homes to be bought. In fact, there is a slight surplus of inventory in our market. And it is this surplus that makes it a great time to buy a home. Buyers have larger than normal selections of houses to choose from. The result is that most of them are taking a bit longer to make their decision.

Sellers, here’s a word to the wise. Your realtor may suggest a few things that will help separate your home from the rest of the available inventory. Before quickly dismissing these suggestions as unnecessary or frivolous, consider that potential buyers may see a dozen or more houses like yours. But it might be one of the small suggestions your Realtor makes that separates your home from the others.

Housing Values. Over the past twenty plus years property values in the OKC metro have increased a modest 3 to 5 % per year. This is both safe and realistic growth. And now with many areas of our country experiencing a property value crisis, we see the value in our slow and steady growth in home values. Property values in this market have held and will continue to hold. We may see small adjustments but even these will be regained in another year or two.

Home Loans. Contrary to popular opinion (which is quite often quite wrong) there is still plenty of money to loan for qualified borrowers. None of the lenders we work with have contacted us telling us that they are running out of money. Requirements for getting a home loan have tightened over the past few month, and rightly so. But there is still plenty of money.

Mortgage Rates. Just this week we have seen the stock market take a nose dive of historic proportions. Yet interest rates have not kept pace. Rates are still quite low. It’s still possible to get a rate in the low to mid 6% range without paying any discount points.

Realtors are hungry. The average sales cycle has stretched out and this means that realtors are working with each buyer/seller longer than before. As a result, they are working harder on more transactions, but they know this pace is only temporary. The good ones have seen similar markets before and they know that excellent customer service and hard work always pays off. If you have a realtor, stick with them. If you don’t, my advice is to get one. Your potential for significant financial mistakes are higher without a realtor’s assistance.

Lenders are hungry too. Contact your lender and ask for a printed Good Faith Estimate of Closing Costs and a Truth in Lending. These two reports will help you identify and eliminate any unnecessary fees and charges. Once found your lender should be a mood to void any superfluous charges.

The national media would have us believe that all the forces have converged for what could accurately be named the perfect financial storm. Fortunately our market remains a safe haven. Kind of makes you glad you live here, doesn’t it? Kind of makes you want to go out and buy a home too. At least I hope it does.

Friday, September 26, 2008

Because We Can Doesn't Mean We Should

This past week the media has been completely absorbed with our nation’s economy; and rightly so. The topic has come up in just about every conversation I have had in recent days. Regardless the final solution created by Washington the lessons to learn are many and carries with it many unknown changes to the way we live life.

It would be a mistake for anyone to assume that after this week, life will go on as usual. Only the na├»ve or the unthinking will believe that change will impact everyone else and leave them untouched. The changes emerging on our horizon will impact everyone. In the words of Bob Dylan in his song, The Times, They Are A’Changin’:
Come senators, congressmenPlease heed the callDon't stand in the doorwayDon't block up the hallFor he that gets hurtWill be he who has stalledThere's a battle outsideAnd it is ragin'.It'll soon shake your windowsAnd rattle your wallsFor the times they are a-changin'.

During the past 10 years policies have been put in place making it possible for millions of Americans to realize the dream of home ownership. While this is a noble ideal, it was only made possible by purposefully recalibrating the minimum requirements for home ownership. Higher and more rigid standards may seem cold, uncaring and aimed at keeping home ownership an entitlement of the middle class. But as our current housing crisis is revealing, we could have avoided this economic emergency by holding to the higher criterion.

Lower down payments result in higher risk loans. Lowering minimum credit requirements only raises the odds that the number of foreclosures will increase. In our attempt to make home ownership available to more families, we set the stage for economic disaster.

Helping millions more Americans realize the ideal of home ownership is not wrong. It is the way in which we went about implementing the ideal that we went wrong. Would more regulation and oversight have prevented our current situation? Probably not. It is highly unlikely that those charged with managing our economy were unaware of this progression toward financial disaster. They saw it coming and consciously chose to allow its progression.

A basic principal has been violated and continues to be ignored by our government. It is a reflection of the way many Americans live their lives. Whether by choice or default the status quo has become, “if we can do it, we should”. Without thinking much further than the end of our noses, we make financial decisions that have potentially life-changing ramifications.

We need a new vehicle. Our decision is based on want rather than need, on monthly payment rather than long-term cost. So a year ago we bought an SUV as our commuter vehicle. Gas was $2.50 a gallon. Now that gas is well over $3 a gallon we see the error of our ways.

We need a place to live. Similarly our decision is based on monthly payment rather than overall cost. We’re comfortable with a $1,500 monthly payment but the lender says we can qualify for a much larger (nicer) house. The payment may be $2,100 but because we qualify for it, we decide that we should buy the larger (nicer) home.

America has the highest average standard of living of any country in the world. This distinction has come at a price. And the price is the sum total of what it has cost us to remain free. Free from tyranny, free from oppressive government, free to worship and free to pursue a happy life. The best way to protect freedom is to treat it as the costly treasure that it is instead of as an entitlement to further encourage the mentality of “if we can, we should”.

The quickest road to ruin is thinking that freedom is unfettered. If our way of life is to be protected, we must learn to live contented lives inside the boundaries freedom provides. Just because we can make home ownership available to everyone doesn’t mean everyone should own a home.

Wednesday, September 3, 2008

The Face of Foreclosure

The Smith family (not their real name) just walked out of my office. I spent the past two hours trying to find a way to help them purchase a home. Sam Smith is a retired Veteran with available V.A. mortgage benefit. Sam and Susie live with their daughter Sarah in her home.

About eighteen months ago, Sarah was involved in an automobile accident in which the other driver was at fault. This driver falsely claimed to have insurance. She also gave Sarah the wrong address and phone number. The uninsured portion of Sarah’s automobile insurance covered most of her medical expenses (over $30,000) but there was still a sizeable amount left for Sarah to pay. For the eighteen months following the accident, Sarah was unable to work.

Two months before the accident, Sam received a small inheritance from his uncle. For the next several months Sam and Susie used this money to continue paying all of the house payment, utility bills as well as the rest of Sarah’s expenses. Susie stayed at home helping Sarah while Sam continued working. Needless to say, the money ran out long before Sarah was able to go back to work.

May 2007 was the last payment that was made. Sam’s $1,500 a month income was completely inadequate to cover the $1,400 a month mortgage payment as well as the utilities, food, gasoline and other household expenses. To make matters worse, Sarah learned that her mortgage had an adjustable rate. After the first year of fixed interest rate payments her payments would fluctuate every six months. Her $1,400 a month house payment would soon swell even higher.

Sarah contacted her loan servicer and told them of her situation and found them unwilling to offer much help. After two months had passed with no payment made, they began receiving phone calls and urgent letters. Sarah continued communications with the servicing company. After four months without making a mortgage payment Sarah received more urgent letters informing her that unless the payment was brought up to date or some other arrangements were made, foreclosure proceedings would begin.

Again Sarah contacted her loan servicer and attempted to make payment arrangements. The only solution she was offered was a repayment of the missed mortgage payments at a 15% interest rate. At the same time she would have to keep her ongoing mortgage payment current.

Sarah and her parents have contacted two attorneys who have made frail attempts to help. Finally they spoke with a realtor who recommended them to me for V.A financing. After running all the numbers, their debt to income ratio is well beyond the V.A. maximum of 41%. Susie is scheduled to begin work in October and the additional income her employment provides should put them in position to qualify for V.A. financing. Until then, the Smith’s live under the constant threat of the loss of their home.

Just two weeks ago, Sarah received a letter from the loan servicer that September 5th was the date scheduled for final judgment. They have little time and few options that will save their house.

The Smith’s are not alone. Throughout the metro area there are other families who have extenuating circumstances that are completely outside of their control that have affected life in ways that threaten their homes. There are not easy solutions to these problems. And when adequate solutions are finally made possible it may be too late for the Smith’s.

The Smith’s are without living relatives who could possible help. They have used all their reserves just to keep the home as long as they have. They have consistently communicated with their lender and have done everything within their power by earning an income while nursing their daughter back to health.

I didn’t enjoy writing this article. And I certainly didn’t enjoy not being able to provide an acceptable solution to the Smith’s situation. I did, however enjoy writing a lengthy letter on behalf of the Smith’s that they can take to Legal Aid in hopes of pushing out the loan servicer’s final judgment to sell their home in a sheriff’s auction.

I offer this article in the hopes that it helps every reader find more compassion and understanding for families who find themselves facing foreclosure.

Wednesday, August 20, 2008

6 Alternatives to Foreclosure

Hopefully this article will be absolutely useless to everyone who reads it. Unfortunately I know that there will be too many who can benefit from the information offered here. The place to begin is to take a hard look at your financial situation.

Create a budget - Plan out a spending strategy for the next several months. See what costs you can trim to free up as much money as possible for home payments. You may need to pay the minimums, or even less, on other debts. In rare circumstances it could make sense to skip payments on some bills so you can continue to pay your mortgage. Another option to consider is to borrow money from friends or family, or perhaps even tap into your retirement funds. Do the latter only if you're convinced you can make future payments; you don't want to drain your retirement funds if you're only going to end up losing the house in the end.

Check your refinance options - If you have equity in your home, if your credit rating is relatively intact and if your lender hasn't yet filed a notice of default, you may be able to get another loan with more affordable payments. An experienced mortgage broker can let you know your options. If you choose this option, be careful not to jump into a risky loan.

Be realistic - Many times, people struggle to hold on to a house they simply can't afford when they'd be far better off without it. It may seem harsh, but it's better to sell a home while you still have equity and some semblance of a credit score than to have it taken away in foreclosure.

Get organized - If you decide to contact your lender and try for a loan modification, you'll need to prepare a small mound of documentation. The lender will specify what is needed, but typically you'll be required to supply the details of your financial situation, your budget, documentation of your hardship and a "hardship letter" that outlines, in virtual detail, the circumstances that led you to fall behind in your payments and the improved circumstances that will allow you to get your financial life back on track.

You may also be required to provide a market analysis of your house. This will document how much equity you have in your home. A real estate agent can typically prepare this for free in exchange for the chance of winning your business should you decide to sell. If a loan modification or refinance isn't possible or feasible, your options are limited to these:

Sell - If you have enough equity in your home to allow you to pay off your mortgage in full, after deducting any real estate agent commissions, then a quick sale is usually your best option. You'll preserve what's left of your credit score and your equity, leaving you in a much better position should you want to buy another home in the future.

Negotiate with your lender for a short sale - If you owe substantially more on your home than it's worth, you may be able to get the lender to accept less than it is owed by negotiating a "short sale." In a short sell, you essentially sell the house for whatever you can get, and the lender agrees to accept the proceeds and not go after you for the deficit. You have to consider the downside. A short sale can further damage your credit scores, often showing up as a "settlement" on your credit report. You may also face an IRS bill on the unpaid debt, which is generally considered income to you.

Allow the foreclosure to proceed - This is generally the worst choice. In some states and in some circumstances, the lender can even go after you in court for any deficit between what the home sells for and what you owe. An attorney or housing counselor can let you know if that's a possibility.

Even if the worst happens, though, the damage to your financial life needn't be permanent. If your situation improves, you may be able to get another mortgage, at a reasonable interest rate, within a few years.

Thursday, August 14, 2008

100 Years of Oklahoma Real Estate

“They’re not makin’ any more of it, so get it while you can!” These are the words of so many of our ancestors that it would be ludicrous for me to claim that my great-great-great grandfather said it first. And in the first land run (April 22, 1889) the land we now know as Canadian, Cleveland, Kingfisher, Logan, Oklahoma and Payne counties were settled.

The following four land runs (September 22, 1891; April 19, 1892; September 16, 1893; and May 23, 1895) most if not all the remaining lands now known as Oklahoma. In each case settlers would stake their claim and then register their claimed lands with the assessor. The assessor filed the claims as a matter of public record and this public record was the start of what is now known as a land abstract.

The land abstract (hereafter referred to as simply, the abstract) contains a documented record of every transaction (including liens and property divisions) on a specified parcel of property. Many of these documents are inches thick and contain many interesting stories, some of which precede statehood.

Pete Katzdorn General Counsel with Elite Title and Escrow in Edmond chuckles as he relates the contents of one such abstract.

A husband and wife were not only marriage partners but business partners in a farm raising pigs for slaughter. For some unknown reason the wife separated herself from her husband and wanted a divorce which he was in no mood to grant. There must have been several attempts to serve her husband with the divorce papers when she came up with a cunning plan.

She was able to convince her husband that she needed his help for something very important on the farm. He finally agreed to come and help with what he thought was a call to butcher a hog. Instead when he arrived he was served divorce papers. “It just goes to show that some married couples should not be business partners and that our state’s abstracts hold a great deal of history” Stated Mr. Katzdorn.

Katzdorn says recent changes to Oklahoma law allow title preparation in some instances to take place without a complete search of the abstract. Prior to this change, title companies were required in all cases to locate and retrieve abstracts before preparing and insuring title work on a home, or land. But since July 1st of this year Katzdorn says, “Borrowers how have a choice. They can either update an abstract or use a prior owner’s title insurance policy in place of a base abstract as part of their updated title.”

These recent changes in Oklahoma title law have made it possible to streamline title preparation in some instances; however the costs associated with title work have not decreased. “Even though title costs have not decreased” Katzdorn says, “costs for Oklahoma title work are low when compared to the fees allowed in many other states.”

Because private citizens are allowed to maintain possession of their property’s abstract, this search often ends in the admission that the compiled document is not to be found. In this event, it becomes necessary that a new abstract be built requiring many days and fees sometimes amounting to $1,500 or more.

In addition when Katzdorn compares other statistics, he says the land records kept by Oklahoma are more comprehensive than many other states which results in a lower number of law suits.
Abstracts can provide some interesting reading but for the most part they are filled with endless ramblings of legal jargon. For most home and land owners the abstract is best protected when it is kept with one of the many title companies that serve our great state.

Friday, July 18, 2008

5 Ways to Save Big on Your Next Mortgage

Buying a mortgage is something most people do only a few times in their lives. In fact most endure the car buying process quite a few times more often than they do the mortgage closing. In both of these cases the buyers make one critical mistake; they misunderstand their roll as a buyer (a.k.a. soon to be owner of a home or car) instead of a borrower.

Yes you do get to move into the house after closing and yes you have technically “bought” the home. But you have used other people’s money to purchase the house and we all know they expect to be well paid for the money they allow you to use.

I’ve written several articles on how to get the lowest interest rate, if you would like copies of these, please contact me and I’ll be glad to provide them to you. But I want to focus this article on how to save money when you are actually purchasing the mortgage. You must be aware that you are purchasing a mortgage first and it is this instrument that allows you to over time, purchase the home.

First, read and understand the paperwork. All fees and costs I will address in this article show up under various names on the Good Faith Estimate of Closing Costs (GFE). Before agreeing to buy any mortgage, you should carefully examine this document. The GFE details the estimated costs of closing the mortgage; lender and broker fees, third party fees, title company costs and any other associated charges.

The other critical document is the Federal Truth in Lending (TIL). This paper shows more than the amount being financed, the total finance fees paid and the total payments made over the life of the loan, it also reports the Annual Percentage Rate (A.P.R.) for the mortgage. The A.P.R. is not the interest rate charged on the loan but the factored result of a formula developed by H.U.D. to help borrowers compare costs of different lenders. The lower the A.P.R., the lower costs associated with the mortgage purchase.

Second, beware of excessive Lender and/or Broker fees. It’s not that we mind the Lender/Broker making a living; we just don’t want them making their entire month’s income on our deal. It is not excessive to see a Broker Fee of 1% of the loan amount. At the same time this fee is almost always negotiable. So negotiate.

Third, do the math on discount points. It is nearly always possible to “buy” a lower interest rate by paying discount points. The secret to making discount points work in your favor is to compare the cost of buying the lower interest rate with the amount the lower rate will save on your monthly payment. For example, a $200,000 mortgage at 6% fixed for 3o years would have a monthly payment of $1,247.74 (principal and interest). Paying a full discount point (1% of the loan amount, or $2,000) might net you a 6% interest rate which would drop your monthly payment to $1,199.10; a monthly savings of $48.64. By dividing the cost of the lower rate, $2,000 by the monthly savings $48.64 you discover that the “break even” point for the lower rate is 41 months or nearly 3.5 years. You will have to make the decision whether or not this works in your favor.

Fourth, avoid markup on third party expenses. Some Lenders/Brokers up-charge appraisal and inspection fees if they are not paid at the time services are provided. You can avoid any up-charge by paying the appraiser directly for his/her services. The same can be done with the home inspector and the pest inspector.

Fifth, carefully watch title costs. This is one area where closing costs rapidly mount up. There are attorney fees, document fees, courier fees, title insurance, abstracting fees, GAP fees, document stamps, filing fees, etc. Most of these fees are competitive between different title companies. But if you are in a city with multiple title companies, take the time to shop. Think of these fees as the title company’s commission for earning your business. Ask them where they can shave some of your closing costs. Even a few hundred dollars makes a difference.

Friday, June 27, 2008

Fixing Credit for Home Purchase

I still answer phone calls almost daily from people wanting to get pre-approved for a home loan who have no down payment and a credit profile with more problems than the agent responsible for resurrecting Brittany Spears acting career. These are well meaning people who could buy a home for what they are paying in rent, if only their credit allowed them to do so.

A well dressed couple sitting across from the desk from me tells me they want to purchase a $175,000 home in a nice subdivision here in Edmond. “My credit isn’t so good. My score is about a 560. I’ve been working on improving my scores, but I don’t know how to speed up the process.”

Genuine empathy is the best way I can describe my feelings for this couple. He continues. “We pay our mortgage and credit card payments on time but the three credit cards we have are maxed out at the $500 limit. The limits are so low because when we got them our credit was really bad. We’re not sure if we should pay these balances off. And we don’t know how to get the recorded slow pays and collections off our credit report.”

This is just one example of the many that regularly come my way. Make no mistake, their credit score of 560 is much worse than “not so good”, it’s awful. Consider that credit scores range between 300 and 850 and that half the adults in America have at least a 700 credit score. Anything below 620 is considered sub-prime. Even FHA cuts off loan approval for scores below 580.

According to credit score creator Fair Isaac, people with credit scores between 550 and 599 have a 51% chance of defaulting on a home loan or any credit account. Contrast this figure with the 2% likelihood of default from people with scores over 750 and it becomes obvious why lending guidelines have tightened significantly for lower scored borrowers.

There is no “quick fix” for credit scores. Think about it; you probably didn’t get into your situation over night and you’re not going to get out of it in a week or two. Most likely it will take several months or even years to correct negative credit reporting.

Still you can speed up the credit repair process by paying all credit card balances in full and never use more than 10% to 20% of the available funds on any one card and pay those balances in full each month. This is the fastest way to improve credit scores.

If you find yourself using 30% or more of the available balance each month, you should consider asking the card carrier for an increased limit. By keeping the amount of utilized credit at or below 20% your scores should realize the maximum benefit.

While rebuilding credit scores it would also be a good idea to be saving up money for a down payment and closing costs. Unless you are a veteran with V.A. benefits, the smallest down payment any lender allows is 3% of the purchase price. Both Fannie Mae and FHA have these programs. V.A. home loans still allow qualifying veterans to finance up to 100% of the purchase price.

In addition to the down payment you should plan on saving enough to cover your share of the closing costs. For a $200,000 home you should expect between 2% and 3% in closing costs. For a $100,000 home the percentages are higher. Check with your preferred lender to get an accurate cost estimate. This way you’ll be able to set an accurate savings plan.

There are professionals who specialize in credit repair and enhancement. Should you decide to use these services, carefully check out their track record by asking for and calling several of their previous clients. The guidelines for home purchases have tightened and will probably tighten again before they relax. If your credit is challenged, let me assure you that it is worth the time and effort to repair it.

Friday, June 6, 2008

The Housing Markets Silver Lining

I’m not an ostrich and I definitely don’t like picking sand out of my teeth. So before you accuse me of burying my head, here’s the disclaimer. My job is financing real estate. I’m exposed to at least the same number of housing market reports as you are. And just this morning I read reports about the increasing jobless market numbers. I’m not an ostrich and I’m also not blindly optimistic.

Just this week the Jackson family (not their real name) signed a contract on a home and we signed paper work for 95% financing. I’ve also spoken with several Realtors who are in negotiations with sellers to sign purchase contracts and other Realtors who are very busy showing buyer’s lots of listings.

I have marketing signs out all over the metro area with a toll-free phone number that plays a pre-recorded message about homes for sale. Every day I receive several email messages that report who and when someone called for information. Realtors are glad when I give them the name and phone number of these prospective buyers.

Title companies are still busy researching abstracts and updating title reports for closings. Home inspectors are still climbing all over homes and writing reports. Pest inspectors are still busy inspecting for pests. Appraisers are still taking measurements and pictures. Real
Estate Agents are still holding open houses and sending buyers lists of potential homes to buy. And the sign companies are still making “For Sale” signs that will soon be stuck in someone’s front yard.

Lenders still have plenty of money to loan for new home purchases as well as refinances; and interest rates remain relatively low. The criteria for qualifying to get this money have changed quite a bit, but many still qualify.

Oklahoma property owners have retained most if not all their property values and in some cases have actually seen a modest increase. The number of home sales is about on par for the same time last year as is the average purchase price.

Gas prices are up…okay, they’re ridiculous. It costs more to go to the grocery store, the drug store, and our favorite restaurants. At the same time, utility rates are about the same, property insurance rates are good, and we’ve dodged several severe weather bullets that could have caused wide spread damage to homes and businesses.

There are new home starts all over northwest and northeast Edmond. Several new neighborhood developments have sprung up in recent months and in my new neighborhood new homes are being bought faster than they can be built.

My point is simple. Life is a balancing act. We have to balance work and family, responsibilities with play time, and the money coming in with the money going out. But the most important balancing act any of us have centers on our attitude. It is true, attitude is everything. And make no mistake, each of us chooses our own attitude.

The unfortunate reality is that we are barraged with a daily overdose of negative news. Headlines announce the instability of the stock market, the effects the rising costs of fossil fuel has on all consumables, while self-proclaimed experts give chase to the perfect storm in the housing industry which they claim is the worst anyone has ever seen.

We may have never experienced all of these exact conditions in their precise proportions, but we are not in totally unexplored surroundings. Our economy is not broken it’s simply flexing. And like a rubber band that has been stretched it will flex a bit and while it will never return to its original shape in all likelihood it will rebound.

What we are experiencing is change. And not many of us truly like it. But the best way I have found to tolerate change is to maintain perspective. And that’s what I’ve tried to help you do in this brief article. The Oklahoma economy is still thriving. Our housing market is strong. It’s our attitude that needs some adjusting. So I challenge you to join me and celebrate the silver lining when the only thing someone else points out is the cloud.

Friday, May 30, 2008

Sell Home Faster: Use Creative Freebies!

Your home has been on the market for several months and it’s been weeks since your Realtor handed you a serious offer from a potential buyer. You’ve dropped the price twice but you haven’t shown your home in over a week. You’ve seen other homes sell, and yours is at least as nice as those. You’re convinced that if more people would just come and see your home, it would sell. What do you do?

The first thing most home sellers think of is to fire their current realtor and hire someone else. “This may be the right thing to do but”, as Morrie Shepherd, Broker of Metro First Realty says, “not always.”

Shepherd has been in Real Estate for over two decades and has seen just about every market condition possible. “The Realtor is not a magician, even though sometimes it seems they are able to pull off the impossible. The Realtor is actually a consultant to the seller, a prospector for potential buyers, a shrewd negotiator and the seller’s personal cheerleader.”

So before you fire one Realtor and hire another, or worse yet, fire your Realtor and decide to sell you house yourself, consider the following ideas to speed up the selling process.

Instead of dropping your price another $5,000 consider offering a vacation package with the purchase of your home. That’s right, allow the new home owners the ability to pick their destination and provide a $5,000 trip allowance. Before you get the wild idea of offering the trip to your Realtor as an incentive, realize that will most likely get them into trouble and in some cases they could actually lose their license. The same goes with the other enticements I will mention.

Visit with a car dealership and investigate the possibility of offering a one-year lease on a new car as incentive to purchase your home. If this doesn’t trip your trigger how about offering a sizeable landscaping allowance that could be used for shrubs and trees or a new deck.

If your home does not have a designated theater room you could consider offering a professionally installed flat screen and surround sound entertainment system for the family room.

There is at least one computer in most homes but the average age of these computers is probably over 2 years. Why not offer prospective buyers a computer package; perhaps a new desktop for the study and a laptop for the kitchen.

If you home has an in-ground pool, consider pre-paying for the next year’s pool service. If home owner’s dues in your neighborhood are significant, offer to pay these in advance for the next year or two.

Anyone can offer a carpet or appliance allowance, you could offer to pre-pay for lawn service, security system monitoring, utilities, or moving company services. If your home has a wine cellar or closet, offer to include a selection of fine wines.

The list of freebies is nearly limitless. But keep in mind that many prospective buyers would still rather have the price of the home reduced by the amount of the incentive. And in the final analysis, you don’t really care. If the creativity of the freebie has attracted the buyer and they like your home enough to make an offer, does it really matter whether or not they take the $5,000 vacation package or you reduce the price of your home by that amount?

Now for the disclaimer: check with your realtor and your lender before publicizing these offers. The Realtor’s Broker may have some specific guidelines that apply to these kinds of offerings. Additionally, when incentives to purchase are offered, the language of the contract is very important for the buyer, the seller and in many cases the lender providing the financing.

Lenders can be finicky when it comes to purchase contract language. It is not possible to check with every lender for the correct manner to prepare the contract for this type of incentive, but check with a couple to get the basic idea of how they want the contract to read.

These are just some ideas to consider if you need to increase the traffic of potential buyers who come and see your home. Hey, selling a home just got fun again!

Wednesday, May 28, 2008

Help, My Home Loan Was Just Sold!

We’ve all received a similar letter notifying us that the servicing for our home mortgage has been transferred to a different company. These letters create feelings of worry and concern among many home owners; and for good reason.

During the past few months lenders nationwide have imploded and the loans they were servicing were quickly transferred to other loan servicing companies. What should be a streamlined process has, in some cases, become a living nightmare for good people who pay their mortgage on time every month.

One bankrupt lender, American Home Mortgage Investment was accused by Freddie Mac of failing to pay property taxes and insurance premiums on over 4,000 home mortgages valued at nearly $800 million. Freddie Mac warned home owners that their lender’s failure to pay for these services out of their escrows could result in lapsed coverage and delinquent tax liabilities, penalties and even foreclosures. This situation was eventually resolved and the potential damage was minimized, but it serves to illustrate to every home owner the importance of being vigilant about your home mortgage.

You mortgage servicer will most likely change: the company who originates your home loan more than likely will quickly sell it to another investor who may or may not have their own loan servicing company. The servicer is the entity you make your mortgage payment payable to. If you’re paying 6% for your home loan, a servicer may take .25% of that interest rate as a fee and pass on the remaining 5.75% to the investor.

A change of servicer does not change your obligation: the note you signed at closing spells out the interest rate and the terms of your loan and if you fail to abide by the terms of that note, whoever owns your note can foreclose.

When your servicer changes expect two letters: the first letter will be a “goodbye” letter. Not unlike a “Dear John” letter your previous servicer send this letter to inform you that your loan has been sold and future payments will be made to a new servicer. You have no choice in this matter but there are a few things you can do to protect yourself. The second letter is a “hello” letter from your new loan servicer.

Make sure you send the payment to the correct address: throw away old envelopes, change the payee information in your computer, update your automatic bank draft account information, etc. By federal law any payments sent to the wrong address in the 60 days after the transfer aren’t supposed to be counted as late. At the same time, it’s probably easier to make sure the payment is made to the correct servicer than it is to get late payments removed from your credit report.

Verify that your property taxes and home owners insurance are paid: some home owners pay these expenses on their own, but many mortgages have escrow accounts set up to pay these bills when they are due. If your home loan has an escrow account it is still your responsibility to verify that your property taxes are paid on time and that you home owners insurance is current and up to date.

Know how to get help: if you aren’t getting the help you need from your loan servicing customer service department, send a written complaint to the customer service department. But make sure this letter is sent separate from your mortgage payment. Also send it certified, return receipt requested to establish a paper trail.

Tuesday, May 20, 2008

Avoid These 7 Home Buying Traps

It’s the American dream that has of late seen a dark cloud emerging overhead. The cloud is named “dropping home values”. It’s happening everywhere except here in the OKC Metro. My article of a few weeks ago demonstrated how property values are holding firm here in the metro while in many places throughout the U.S. home values are eroding like a sugar cube in hot coffee.

So for the few areas around the country (like our great city) where purchasing real estate is still a great idea, what are some of the more important pitfalls to avoid when taking the plunge into home ownership?

Inspect the Inspectors: Every home transaction should have an inspection performed by a licensed and professional inspector. Almost every Realtor has an inspector they like to use and they usually aren’t bashful about recommending them. It’s still your responsibility to meet the suggested inspector to determine whether or not you are comfortable with them. If not, interview several others until you find the inspector you want. Sometimes it’s best to find the inspector of your choosing, this way you might feel more comfortable that the only interests being served are yours.

How much you can afford: This surprises many first time buyers, but the people offering you the advice really don’t know what you can afford. When providing you a monthly payment amount, they are giving you the guidelines form the lenders. Only you know how much home you can afford so you can still save for the future and go on vacations. Remember, the amount of home you can afford is determined by you and your budget, not an arbitrary figure extracted from a lender’s equation.

Short Term Financing: Taking a five-year ARM (Adjustable Rate Mortgage) loan may be appealing because the rate is a bit lower and anyway, you’ll probably refinance the loan within 5 years. But be careful, your job or income situation may change between now and then and you might not be able to refinance later. Or your current health situation may not be a rosy five years from now. And don’t forget the potentiality that interest rates could rise making it impossible for you to afford the payments at the newly refinanced rate. .

Opening and/or closing credit accounts: Once financing for your new home is underway, in other words when you’ve signed the papers and the loan process has begun, don’t go out and apply for new additional credit of any sort thinking that you’re helping your credit picture. At the same time, don’t close any credit accounts during this time. Both of these activities have negative impact on your credit picture. The best advice is to wait until your financing is complete, in other words, until after closing, then you can go out and apply for new credit or close existing credit accounts.

Study the neighborhood: Drive around the neighborhood making your own observations. Don’t take the flyer’s opinion that it’s a “quiet neighborhood”. Take several tours at different times of the day and evening. Perhaps even walk around the neighborhood and make additional observations. Talk to neighbors and find out where the problem neighbor is. Every neighborhood has one and you don’t want this person living next door to you.

Buying a home when you’re not ready: Don’t allow anyone to rush you into buying a home until you know you’re ready. It’s easy to get into the home buying mode when key friends or relatives are purchasing new homes. Especially when your current home has lost its state of nirvana. Be your own boss, don’t let anyone rush your plans to buy; you’ll know when you’re ready.

Not buying a home when you are ready: Lastly, don’t sit on the sidelines forever. No one truly knows what the real estate market is going to do. So when you’ve done your research and you know you’re ready, dive in. Tour the home and then a couple of days later schedule a follow up tour. If the home still meets your needs and it falls inside of your budget, make your move! Trust your instincts; make you best deal and enjoy it.

Friday, May 16, 2008

Fradulent Foreclosure Relief

Perhaps one of the most insidious manners in which humans prey upon one another is when one individual is hurt, stunned or injured. Most home owners are decent folk. They bought a home with a mortgage fully intending to make every payment. But then life happened.

For whatever reason, and there are many, first one payment was missed and then a second. Now 60 days late on mortgage payments the strain and embarrassment are almost too much to bear. Any family finding themselves in this position is vulnerable to a very real type of home equity fraud.

At every home closing there are what seems to be an endless stack of papers and countless places for you to sign. After the first few sheets the massive amount of information contained in these documents serves as an effective novocane for the brain. In short there are very few borrowers who are capable of retaining more information than the monthly payment amount and a ballpark estimate of their interest rate.

This mind numbing experience is overwhelming for most borrowers, so much so that they resign themselves to never truly understanding it all. And herein lays the danger.

When the borrower finds themselves more than 30 days in arrears on their mortgage payment, the lender places a negative mark on the borrower’s credit. They do because one of the papers every borrower signs at closing is the agreement that should they make late mortgage payments the lender will report this to the credit repositories.

When the borrower becomes 60 days late, because this late payment involves real estate, the event falls into the category of public information and is filed in the county where the property is owned. Anyone can research this information and for a small fee obtain an official report of properties at risk of foreclosure.

Unscrupulous people take this report and, under the guise of helping the home owner “get back on their feet” actually commit a series of acts placing the home owner in a worse situation than where they currently find themselves. The con goes something like this.

The con contacts the home owner who is seriously in arrears with their lender and promises to put their experience and knowledge to work for them helping them “catch back up” on back payments and keep their home. The home owner is already fearful of losing their home and any equity they have built, so they welcome this redeemer into their home.

This knight in shining armor produces a stack of papers that at first glance promise to help the home owner keep their home without having to file bankruptcy and without further damage to their credit report. Instead of protecting themselves and their home they have in fact signed the ownership of their home over to the con.

The con is experienced in what he does next. Once he is legally placed on title of the home, he can and does take out a second mortgage removing as much of the homes equity as possible.

Not only does he not make good on any of his promises to help the home owner “catch up” on back mortgage payments, he also robs them of any equity they had in their home. This leaves the home owner in far worse condition than before. He walks away from the entire situation thousands of dollars richer than he was before.

There are legitimate agencies that can help anyone who finds themselves in arrears with their lender. One such group is the Homeownership Preservation Foundation. Here home owners can find guidance and counseling to help them avoid foreclosure. Contact them at 1-888-955-HOPE. This service is available 24 hours a day and provides counseling in multiple languages.

An additional resource defining key mortgage terms can prove helpful to anyone going through this painful process. Knowledge and understanding are even more critical when vulnerability is at it greatest. This resource can be found at:

Wednesday, May 14, 2008

How to Stage Your Home for Quick Sale

Thanks to the abundance of home improvement shows on some cable T.V. channels home shoppers have higher expectations than they once did. When the average home shopper drives by a home first impressions are more important than ever. And when they walk into a home for the first time it truly is the subjective elements that can make the difference between them making an offer or taking a pass.

Most home sellers could benefit from the services of a home stager. Home stagers provide everything from a written evaluation of ways to maximize the home’s features to providing contract labor for any suggested improvements to additional furnishings and decorations.

Staging Solutions by Suzan owner, Suzan Knutson provides several helpful ideas for anyone looking to stage their home for optimum sale. “First they need to have a stager come by for a consultation visit.” This is not as intimating as it may sound but Knutson warns that home owners should be prepared to hear suggestions that will stretch their imagination.

Knutson related one home she staged where she took the oversized entertainment center apart and used the two end pieces as bookcases in the study. “Most people have lived in their home so long that they can’t imagine their furniture being in another room of the house” said, Knutson.

The front porch is critical to making a feel good first impression. Knutson says home sellers should get a new doormat and even paint the front door a nice complimentary color. Seasonal flowers placed in decorative pots can serve to draw potential buyers into the home for a closer look.

Knutson has 13 home staging secrets and shared several with me. “I’d like to share them all, but if I did, why would people need me?” She said with a smile. Knutson recommends to think of staging your home like you would if you were selling your car. No one would think twice about detailing your vehicle before selling it; it should be the same with your home. But when considering a stager’s suggestions don’t get offended. You have lived in the home and like it, but the stager is charged with making the home sellable.

Home Staging Secret One: Conquer the clutter. This means minimizing the nick-nacks that sit around the home. It also means thinning out the closets and other storage areas. Cluttered shelves and overstuffed closets and storage areas give the impression that the home is too small to be lived in comfortably.

Home Staging Secret Two: Less is more. This means that you might be asked to take out as much as half of your furniture. “Remember your selling square footage, not furniture” Knutson says. Potential buyers want to see open floor plans and bright rooms.

Home Staging Secret Three: Accessorize in odd numbers. In other words put three candlesticks on the mantel, or 5 decorative rocks in a display bowl. Knutson advises that odd numbers of accessories are more appealing than even.

Home Staging Secret Four: Paint it black. If the furniture left in the home shows signs of wear like a wood breakfast table and chairs, paint the chairs black and the table an accent color. If the coffee table has seen better days paint it black.

“The benefits of using a home staging services are easy to point out” Knutson says. Staged homes bring a higher selling price. Staging a home can be done with little or no cost apart from the initial written report which in many cases can be as low as $75. Staging a home can sell much quicker than the same home not staged.
If you’re looking to maximize your selling price and shorten the time your home stays on the market consider using the service of a home stager. Suzan Knutson can be contacted at her website: or via email at:

Tuesday, May 13, 2008

New Web Helps for Home Buyers and Sellers

The Internet is in a constant state of flux. Web pages that were there yesterday are gone today. There are hotlinks, permalinks, blogs and diggs. At least they were there the last time I logged on. But or those of us who are either looking to sell a home or buy a home there are two new resources that deserve an honorable mention.

If you’re looking to buy a home you need help in several ways. First you need to find a home and then you need to find financing for that home. That is unless you’re among the fortunate few who pay cash for their homes.

If you’re looking for a home feel free to log onto and interact with other home buyers and real estate professionals to discuss your needs, wants, concerns and questions.

This website is fairly new and features sections for home buyers and sellers where you can pose questions to real estate professionals all across the U.S. Here are a few questions that you can tailor make to suit your specific needs.

Can someone tell me the positives about (a specific) neighborhood? How do I interview a buyer’s agent? Can anyone tell me if the offer I am about to make is a low-ball offer and likely to offend the seller? Which are the safest neighborhoods in town?

Every day there are questions posted that could quite possible spur your thinking about things you would not have considered before making a home purchase. Realtors may find this site helpful in networking with potential buyers by answering some of their questions.

Asking a question is as simple as typing in a box and clicking the ask button. Before long you’ll receive emails notifying you of the answers. You’ll be amazed at the depth of the knowledge pool available on this site. And who knows you might even find out something you didn’t know before.

If you’re a home seller you can find some helps here as well. Questions about setting the best asking price and when to make a price concession and when you do, how much is too much can be found here. Along with these questions you can also pose questions about how to make your house more sellable. Even if you’re using a realtor to sell your home, it never hurts to have more than one opinion.

Another site for both buyers and sellers is This site has been around for a while and is quite popular to help sellers determine the value of their homes. But now Zillow offers a new service for home buyers. Now there is a mortgage tab on the home page.

Click this tab and after you create a profile you can request mortgage finance quotes in a completely anonymous way. The form will ask you for information about your estimated credit scores, your income, debts, purchase price and down payment and then submit your request completely anonymously. In other words any mortgage provider who has signed up to receive this request cannot see your name, phone number, or email address. They can provide quotes to you and you have complete control over whether or not you wish to respond to them. Leave their quote unanswered and they have no way to contact you.

Of course these are just two of the hundreds of Internet helps available to you. You may already have other web applications you like to use, but you owe it to yourself to check these out. There might be something of value there. Of course there is no substitute for meeting a realtor and a mortgage provider face to face. Internet is great for investigation, but if you’re anything like me, you like to meet someone before trusting them with the single biggest purchase you’re likely to make in your life time.

Good Luck!


Monday, May 5, 2008

Haunt Free House

In my post Aptil 25, 2008 I told how I had been hearing a haunting sound that made me think my house was haunted. Well, thanks to a reader (Lee from OKC) I discovered that the problem was a vibrating rain gutter.

When the wind blew from a specific direction and with sufficient velocity it caused the back side of the rain gutter (the side closest to the side of the house) to vibrate. If you look at your gutters you may see a slight gap in this spot.

Well the problem was a quick fix and here's what I did.

I took a wood screw (about 1 1/4 inches in length) and a soft plastic spacer. Then used my cordless drill to affix the back of the gutter to the house, thus preventing further vibration.

The next evening another wind storm blew through Oklahoma City and I stepped outside just to check out my handywork.

I stood under the spot I repaired and the strange noise was gone.

Just for good measure I built a small fire underneath that place and offered the neighbors cat as a sacrifice against future haunts.

Monday, April 28, 2008

I Found a Refuge

Dear Home Owner,

Faced with yet another weekend filled with personal frustration trying to reach the end of the seemingly endless list of household projects, I was grateful when David (my son, see picture below) asked me if I would like to help him with a project this past Saturday.

It meant that I would have to finish my Saturday chores early in the morning before heading downtown OKC to help with his project. But what the heck.

7:30 am I donned shorts a long-sleeved T-shirt and sunglasses and went outside. I started the mower, cut and trimmed the yard, watered the plants and then had a bowl of cereal (Raisin Nut Crunch) before we headed downtown.

I was a bit nervous because I didn't quite know what to expect nor what I would find to do when we arrived.

Once we found parking (which was not easy since the Annual Festival of the Arts was going on just a couple of blocks away) we made our way to a building currently under renovation. We met Tim (see picture below) who I can best describe as the driving force behind this undertaking. I shook his hand and asked him what he called the place and he said, we call it "Refuge".

My son took me upstairs through what at first seemed a labyrinth of stairs and hallways to a room that he proudly declared to be, "the room he has adopted". Over the past four weeks he and some of his Fraternity buddies have come down and poured hours of labor into making the room ready to remodel.

You see this particular building was recently a drug house and someone chose David's room as the target for a Molotov cocktail. When the young men first started the renovation the room was completely charred black. When we walked in this past Saturday, the walls had been scrapped and the flooring had been removed.

We spent the day with several volunteers from the University of Central Oklahoma (see picture below - thanks ladies!) and some teenagers from out of state making a few more baby steps toward the apartment's completion.

The one small closet in the apartment had to be stripped of plaster board and the lathing because of the fire. The bathroom still needed to be cleaned of soot and we spread over 15 gallons of wall texture on the concrete walls to prepare them to receive paint.

For the hours we worked there I forgot all about the projects that needed to be done at home. And I was actually happy working with some other volunteers. HomeOwnerGoneMad had found a refuge in this volunteer labor.

I want to challenge the readers of my blog to join me over the next few weeks to help complete this apartment renovation. We need some labor and some supplies in order to meet the May 30th deadline.

Here's a list:
  • We need to rip out and replace the Sheetrock in the ceiling (about 6 sheets)
  • We need to install new Sheetrock in the small closet (about 3 sheets)
  • We need to rip out and install new counter tops for the small kitchen (we need the counter top)
  • We need laminate flooring for the kitchen (about 10 x 12) and perhaps some sub flooring to make the installation smooth.
  • We still have more texture to spread on the walls before we paint.
  • We need paint for the walls
  • We need a bathroom sink faucet (it's a unique fitting)
  • We need tile for the shower floor (about 3x3 - it's a small shower) and thin set and grout.
  • We need a closet door and entry door (I'll have to get the dimensions)
  • We need a Futon (the living/bedroom are one in the same)
  • We need pillows
  • We need sheets and blankets
  • We need a bookcase
  • We need books
  • We need a CD player and Cd's (with appropriate music)
  • We need a couple of window blinds
  • We need an area rug or two
  • We need a dual electric burner
  • We need dishes (set of four; bowls, plates, cups)
  • We need eating utensils (forks, knives, spoons)
  • We need dishtowels
  • We need pots and pans
  • We need a microwave
  • We need a dish drying rack
  • We need serving dishes
  • We need measuring, cooking and serving utensils
  • We need a can opener
  • We need storage containers for left over food items
  • We need a scrubber for dishes
  • We need a shower curtain
  • We need a shower caddy

If any of this touches your heart, please leave me a comment. I would welcome your donation of time or any of the above listed items.

Join me and my son as we work with others to create a refuge in downtown OKC where the needy can find their permanent eternal refuge in Jesus Christ.

Trey Bowden

Friday, April 25, 2008

Help I Think My House Is Haunted!

Dear Home Owner,

I swear my new house is haunted! Who has ever heard of such a thing? I could understand a haunting if this were an older home that had been the location of some horrific murder or suicide. But it’s a brand new house; and it’s not constructed on some ancient burial site. The closest cemetery is miles away!

Over the past few days I’ve heard a spooky moaning coming from the back patio area. These noises usually happen in the evening hours when both my wife and I are home. Yes, she’s heard them too.

To make matters worse, the weather has been a bit unusual which serves to enhance the overall creepiness of the sounds.

Until a few days ago I enjoyed sitting on my back patio. But recently the Oklahoma wind has been “sweeping down the plain” and threatening to level anything that dares get in its way. So we’ve been forced inside.

This is just as well. The creepy moaning seems to get worse when the wind blows. The harder it blows, the louder the moaning gets and the higher its pitch. When the wind blows softly, the moaning sound is low and intermittent.

It makes going to sleep at night a bit of a challenge. I can still hear the sounds in our bedroom. I haven’t slept well since the noises started. Between the strange sounds and my worrying that the consistent high winds will create some shingle work for me to do, I’m turning into a nervous wreck.

I either need someone to recommend a good exorcist or offer some other suggestion to stop the noises. It’s driving me nuts!

Thursday, April 24, 2008

Making a Back Yard

Dear Home Owner,

A brand new home, that's what we bought July 19, 2007. A nice large lot, 2,500 s.f. home. 6ft. privacy fence (that I didn't ask my friend to help install - see post Monday April 21, 2008), fully sodded front and back yards with sprinkler system, plenty of landscaping in the front, but absolutely none in the back yard.

That's how I introduce the subject of today's post.

I walk out my back door, step out on my covered patio and have similar feelings to what the Almighty must have had when he stepped out on the edge of nothing to begin creating everything.

No, that's not quite accurate.

I feel more like I'm standing before a blank canvas with instructions to paint a masterpiece that will endure the test of time.

No, that's not it either.

The best word to describe the way I feel is, overwhelmed. I don't have a solid clue what to do. I have several ideas, but they are more smoke than substance.

I need some real help. So I turn to several Internet landscaping websites.

There are some nice ones out there.

Here's one:

Here's another:

So I made a few selections but before ordering I printed off the ideas and took them to a local nursery, TLC. Glad I did.

I spent about 20 minutes with their in-store garden specialist. Out of the 20 various plants and bushes I had selected from the websites, she showed me eight of them that won't grow well here in central Oklahoma.

Bottom line: look on-line, but compare their suggestions with the experts at your local garden nursery.

Now Let's Get Busy,


Monday, April 21, 2008

Building Fences and Meeting Neighbors

Dear Home Owner,

About two weeks ago I closed a mortgage for a poker buddy of mine. The closing was at 2:00 pm and by 3:00 p.m. he and I were headed to his new house to move in his new furniture.

We called in a couple of "young bucks" to help move the really heavy things. This allowed us to do what we both do best; lawn chair supervision. One of his new neighbors came by to welcome him to the neighborhood. I stood to greet her but my friend scarcely looked away from his managerial responsibilities to acknowledge her.

Gladis introduced herself, "I'm a member of the homeowners association. I've been watching you move in; you have some nice things."

"Uh-huh", my friend grunted. "Hey!" he howled. "You guys be careful with my gun safe; it's loaded!"

Gladis made another attempt at connecting with her new neighbor. "My husband and I retired a couple of years ago and moved into the neighborhood and we just love it. What do you do for a living?"

My friend stood and pointed to his fourteen-foot trailer, "My name's John and I sell stuff out of that". His attention was diverted back to the activities of the young bucks.

Now, I know my friend, and I know he's just playing with the lady. But Gladis didn't get it and was clearly uncomfortable.

"What kind of, uh, things do you sell, John?"

"Nuts, bolts, wire, electrical fittings, various tools; things used in manufacturing. Everyday I pull my trailer to my customer's businesses and restock these supplies."

Less annoyed, but more confused, Gladis managed her best, "That's interesting".


She finally spoke, "Well, I can see you're busy...I'll let you finish moving in."

John just smiled and said, "See you later." Gladis walked down the drive way and we both resumed the more pressing task of lawn chair administration.

After the heavy stuff was in place the young bucks left and we finished the move-in by about 10:00 that evening. "Finished", that word has a wide span of subjective meanings. Well, let me put it this way; I was finished.

Fast-forward a few days...

The next Saturday I was back out there helping put up stockade fence. Not that my friend is crazy about spending the money, but his subdivision has covenants which stipulate that the trailer he uses for business must be parked behind a fence. So, like it or not, he's committed to putting up a fence.

Never mind that the trailer is eleven-feet tall and the fence is only eight-feet tall. And never mind that the south property line (where the fence will be installed is over two-hundred feet long) and the fence we will be installing is only one-hundred feet long. "Hey, it's behind a fence" my friend shrugs.

The galvanized heavy duty tubular steel fence posts were already secured by concrete in the ground. Most fences of this type are installed using pre-fabricated fencing panels. These panels typically come in eight-foot sections constructed on three 1x3 runners. For most applications these panels are more than adequate.

But not for my friend. No. He calls this, "The easy way out".

We install sixteen-feet long 2x4 runners and then attached each four-inch wide eight-foot tall fence panel with six, three-inch wood screws. Thank the tool gods for cordless 18 volt hand drills.

By the end of the day we had put up just about one-hundred feet of fence and it was beautiful. Just two problems. There are still just over four-hundred feet of fencing to put up. At one-hundred feet of fencing per friend, I believe my friend has enough resources to put up about another two-hundred feet of fence. Second problem, I think Gladis is President of the homeowners association.