Saturday Reporter-Herald May 15, 2010 E1
Real Estate Matters
www.realtyguide.com • Saturday, May 15, 2010 • Reporter-Herald
Fixed-rate mortgages remain supreme
Ownerfinanced sale has difficulties
JADE CODY SPECIAL SECTIONS EDITOR
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ILYCE GLINK TRIBUNE MEDIA SERVICES
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uestion: My son is selling his house. The buyer and he signed a purchase contract. My son offered owner financing to the buyer. The buyer inspected the property with a professional home inspector and submitted a lengthy list of repairs. My son pulled a copy of the buyer’s credit history and, after seeing that his credit score was only 575, decided to back out rather than be stuck with a possible deadbeat owner. My son’s real estate agent didn’t indicate there would be any problems in canceling the deal. But now the buyer’s agent is threatening to sue my son for $10,000, saying he cannot back out of the deal based on the credit score. How shall we advise my son? Should his real estate agent have been more on top of the situation and warned him about what might happen if he canceled the deal? Answer: It doesn’t sound as if I See GLINK/Page E5
Inside this week’s Home & Real Estate
Sarah Warnock, Broker Associate with Prudential Real Estate
Social Networking Area Realtors utilize social networking
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Director y Page E4
This Week’s Rates
Why you need a home inspection Ritter signs broker lien law
TIMOTHY R. SCHUL CTW FEATURES
TREY ROGERS, KRISTEN M. BRONSON COLORADO ASSOCIATION OF REALTORS
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Realtor of the Week
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ith mortgage rates hovering around 5 percent for much of the first quarter in 2010, the majority of homebuyers are choosing fixed rate mortgages. According to John Giroux, owner of Family Mortgage Co. in Loveland, the reason is simple: it makes good sense to lock in mortgage rates when they are this low. Freddie Mac last week released survey information indicating that fixed-rate loans made up more than 95 percent of refinance loans during the first quarter this year. This was regardless of whether their original loan was an adjustable-rate mortgage (ARM) or a fixed-rate, The information was gathered in Freddie Mac’s quarterly Product Transition Report. The report also noted that 15-year fixedrate mortgages also gained steam. Jim Hunter, the Division Senior Vice President of Production for Cornerstone Mortgage in Fort Collins, said there was a substantial increase in 15-year mortgages, especially regarding refinance loans. “We’re seeing a lot more interest in the 15-year notes,” he said. Refinancers are motivated primarily by quicker gains in home equity. In a press release, Frank Nothaft, vice president and chief economist for Freddie Mac, said “average interest rates on 30-year and 15-year fixed-rate mortgage loans remained extraordinarily low during the first quarter, averaging 5.00 percent and 4.38
percent respectively in Freddie Mac’s Prima- to rise in each of the past three years. “My ry Mortgage Market Survey. The average thoughts are there’s not much room for initial rate on a 5/1 hybrid ARM was 4.20 them to go lower,” he said. “I’ve been prepercent during the first three months of dicting for three years that rates should be 2010. With fixed-rate interest rates near a about 2 percent higher than they are. But generational low and initial interest rates nothing makes sense anymore in this econon hybrid ARMs close to fixed-rate levels, omy.” large numbers of homeowners have chosen Freddie Mac recently released the results fixed-rate loans for refinance,” he said. of its Primary Mortgage Market Survey in “While homeowners are choosing the which the 30-year fixed-rate mortgage avercomfort that comes with constant monthly aged 4.93 percent with an average 0.7 point principal and interest payments on fixedfor the week ending May 13, down from last rate mortgages, at the same time many bor- week when it averaged 5.00 percent. Last rowers are now looking at paying down year at this time, the 30-year FRM averaged their mortgage balances faster by choosing 4.86 percent. The 30-year FRM has not a shorter mortgage term of 15 or 20 years been lower since December 10, 2009, when instead of 30 years. it averaged 4.81 percent. “During the first quarter, 25 percent of “Interest rates on fixed-rate mortgage deborrowers who had 30-year fixed-rate loans clined for the 5th straight week,” said refinanced into a 15- or 20-year fixed-rate Frank Nothaft, Freddie Mac vice president loan, the largest percentage shortening and chief economist. their term since the third quarter of 2004, when about 30 percent of borrowers who had a 30-year fixed* rate loan opted for a shorter-term fixed-rate loan or a balloon note,” Nothaft said. Last While no one knows how the We ek Trend To d ay rates will respond now that the Federal Reserve has stopped pur30-Year Fixed: 4.99% 5.03% chasing mortgage-backed securities, Hunter said he expected rates 15-Year Fixed: 4.29% 4.29% No change to creep up toward the end of sum3.67% 5/1 ARM: 3.68% mer, though he thinks they will remain attractive throughout the end * Rates provided by Bankrate.com. All rates are subject to change. of the year. Giroux said he has expected rates
he best $300 my wife and I spent in the process of buying our first home did not contribute in the slightest to the actual purchase price. Rather, it kept us from purchasing a home that would have been a disaster to live in. The modest fee was the cost of the home inspection on the first home we entered into contract on, a cosmetically gorgeous three-bedroom, twobathroom condo with a huge backyard. It was, in fact, too good to be true, as our hero home inspector eventually discovered. Among her findings: • An improperly sealed and pitched roof, with chimneys in disrepair • Shoddy masonry and tuck pointing • Improperly installed mechanicals • Presence of mold in the basement • Something not up to city code We did not even complete a full inspection — let alone read the report — before we decided then and there to back out. And, of course, our inspector gained clients for
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life. Hiring an inspector is a “makes sense” thing, said Steve Ramos, owner of Envirovue Home Inspection in Petaluma, Calif., and featured certified home inspector on the HGTV program “House Detectives. ”Ramos lays it out simply: A buyer is going to pay a few hundred dollars for an inspection that, on the low end, may find four to five times that amount in repairs. “There’s a lot that goes into deciding if you want to buy a house,” he said. “All it comes back to is value. Is what I’m paying for the house worth it? “You should need to look at the Realtor’s market analysis and the appraiser’s report in conjunction [with the inspec-
tion], and those three reports should give you a good idea about what you’re buying,” Ramos said. The urge to become a homeowner should not overpower the importance of protecting yourself with an inspection. “Push for a 10- to 15-day inspection period so you can make a little bit better-educated decision,” Ramos said. INSPECTING YOUR INSPECTOR Just like your buyer’s agent, you want to find an objective, independent inspector who has only your interests in mind.
n April 29, Governor Bill Ritter, Jr. signed the Commercial Real Estate Brokers Commission Security Act (HB10-1288, the “Broker Security Act“) into law. The Broker Security Act gives commercial real estate brokers in Colorado the opportunity to file a lien against an owner’s commercial property when the owner fails to pay a broker a commission due for procuring a tenant for the property. The Broker Security Act will take affect 90 days after adjournment of the General Assembly, which will be August 11, 2010 if adjournment falls on May 12, 2010, the constitutional deadline. The lien right created by the Broker Security Act is similar to the right provided to building contractors and subcontractors, architects, engineers, and surveyors under current mechanic’s lien laws, but it differs in significant ways. Brokers may obtain lien rights only against commercial properties and only on lease transactions, not sales. Also, there must be a written agreement between the broker and commercial property owner or the property owner’s agent. The Broker Security Law is intended to encourage resolution of disputes
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