FHA plans to halve mortgage loan’s 6% seller concession this summer 

By Kenneth R. Harney
Saturday, May 29, 2010; E01 

One of the key attractions of FHA mortgage financing is going, going — but not quite gone. Sellers and buyers who move fast can still make the most of it. 

Sometime this summer, the Federal Housing Administration plans to slash maximum “seller concessions” from 6 percent of the home price to 3 percent. Seller concession rules allow buyers to look to the property seller to pay for some services and taxes connected with the transaction — loan origination and local transfer fees, appraisals, inspections, closing and escrow costs, among others — though not the down payment. 

Say you’re buying a $200,000 house. If you are using FHA financing under current rules, you can structure the contract so that the seller agrees to pay at settlement all closing costs and even the cost of some needed repairs, up to 6 percent of the price, or $12,000. On a $400,000 house, allowable concessions go to $24,000. That’s huge, especially if you have to struggle to come up with a 3.5 percent down payment and you’re not sure where you’ll find the closing and repair money.

Contrast that with using Fannie Mae or Freddie Mac conventional financing, in which seller concessions generally are limited to 3 percent. For many buyers, the extra negotiating flexibility built into the FHA program makes the choice of programs a no-brainer. 

When FHA officials announced the policy change this year, they said the long-standing 6 percent maximum “exposes the FHA to excess risk by creating incentives to inflate appraised value.” That would occur when sellers agree to pay buyers’ closing and other expenses but merely tack on those costs to the final sale price of the house. Rather than agreeing to a $200,000 price as in the example above with $12,000 worth of concessions, the final contract price of the house would be $212,000. 

If an appraiser did not detect and report the price boost, FHA would be insuring a mortgage on a house worth less than the sale price. In fact, because the rules allowed a 6 percent seller concession and the down payment was 3.5 percent, FHA would be insuring an underwater loan from the start. To limit further possible losses, FHA decided to cut the concessions limit in half. 

In its announcement, the agency said the change would occur in “early summer” after publication of a Federal Register notice and a public comment period. But Lemar C. Wooley, an FHA spokesman, confirmed May 19 that there has been no Federal Register announcement. 

Since public comment periods frequently run for 60 days, followed by a review period, it appears that any start date for the concessions change has slipped to late summer at the earliest. Wooley said in an e-mail that “early summer may be stretching it, but I’m told that we do still expect it this summer.” 

Why does the timing matter? Whatever you might think of FHA’s existing seller-concession rules, the fact remains: Concessions of 6 percent are still allowed and will be until FHA announces they’re not. Buyers and sellers who have a legitimate need to build concessions into their contracts can still do so, but they need to know that the clock is ticking. 

Smart real estate agents and mortgage loan officers are putting out the word: If a home sale deal needs the 6 percent FHA feature, get the contract put together as fast as possible. Abbie Higashi, national designated broker for ZipRealty of Emeryville, Calif., said that she fully understands and supports the FHA move but that until the change takes effect, agents should “do the deals now” if more than 3 percent concessions would help the sale go through. 

Paul Skeens, president of Colonial Mortgage Group in Waldorf, said he is advising loan applicants to request a “good faith estimate” upfront that provides for the seller to pay 100 percent of closing costs and prepaid fees “so that in cases where the buyer doesn’t have much more than the down payment, that’s the only cash they’ll need to close” on an FHA loan before the policy change. 

Skeens said he would prefer that the FHA adopt a “sliding-scale” approach to concessions, with higher concessions allowed on lower-priced homes, and the lowest concessions allowed on high-priced properties. Because closing and loan expenses generally represent a larger percentage of the total transaction on lower-priced houses, he thinks the new 3 percent rule across the board “will have a much heavier impact on the people FHA traditionally has served,” who are buying modestly priced houses and have limited cash.

See the link below for a more detailed look at your neighborhood.  Not all areas are performing the same, so please let us know if you would like a more in depth market analysis of your home.  If you have been considering moving up to a larger home or different neighborhood, this could be the best time to make the move.  Interests rates continue to be at all time lows and are expected to creep higher by the end of the year and into next year.  Please give us call and we would be glad to assist you with any of your Austin real estate needs.

Austin Area Real Estate Market Update - April 2010

If you feel as though your 2010 proposed value is not correct and are considering filing a protest, you may have a new option for filing if you live in Travis County.  Travis County has introduced a new online option for some homeowners to protest property appraisals.   If you are eligible to protest online, you would have received such notice along with the appraised value form.   The general criteria for homeowners with the online option is that their home be valued less than $300,000 and that they are in very homogenous neighborhoods (near similar homes in age, size and condition).

The online system will function similar to the traditional process.  Homeowners will be able to log in to the system and file their protest.  If TCAD decides to offer a settlement, the homeowner has the option to accept or reject it online.  If the offer is rejected, the homeowner will be scheduled for a formal hearing.  The online system should save homeowners both time and money.  Chief Appraiser Patrick Brown hopes that the electronic system will eventually be expanded to all homeowners.

Remember, whether you have the online option or not, the deadline for filing a protest is June 1, 2010.  Please contact us, Joe and Jessica Honegger, if you have any questions regarding your 2010 proposed property values or if you would like assistance with any other real estate need.

It usually only takes a few minutes after seeing the 2 pink lines on a pregnancy test before Mom starts dreaming of her next decorating venture: the nursery. Babies’ rooms are so much fun because you really can play out some of your childhood fantasies. However, this season of life often means you will be selling your house in a couple of years as your family continues to grow! Austin’s own Get Babied asked me to do a workshop for all of their expectant clients to help them create a room that will grow with time, and that won’t send a potential buyer running out the front door! Here is what I shared with them:

1. Don’t go crazy on customizing the walls: Here are some of my favorite wall decals from Land of Nod. They are not permanent and can go into the next nursery, playroom, or house! Other great sources for wall decals: Ferm Living, Marimekko, and What is Blik

I LOVE wallpaper, but it is a huge pain for future homebuyers to take down. You literally have to steam off the wallpaper and sometimes even redo drywall! Here is a non toxic wall adhesive recipe that is also semi permanent:

• 1 cup flour (wheat, corn, or rice)
• 3 teaspoons alum
• water
• 10 drops oil of cloves (natural preservative)

Combine the flour and alum in a double boiler. (If you don’t have a double boiler, set a smaller pan inside a bigger one that contains enough water that can be brought to a boil without overflowing). Add enough water to make a consistency of heavy cream; stir until blended. Heat, stirring constantly, until the mixture has thickened to a gravy texture. Let cool. Stir in the clove oil. Pour into a glass jar with a screw top. Apply with a glue brush.

Makes 1 cup. Shelf life: 2 weeks refrigerated.

Try to choose a wallpaper that isn’t SO baby, that the room couldn’t be repurposed for a study, or that your soon to be preschooler (they grow quickly!) will still LOVE.  Also, choose to do an accent wall instead of the whole room. Cole and Son is my favorite wall paper manufacturer.  Here are a few selections that would work great in baby’s room but also in a study or preschooler’s room:

Cole and Son Contemporary III Collection

Cole and Son Flower Collection

Cole and Son Flower Collection

Cole and Son Contemporary III Collection

2. Don’t let accessories be last!

When decorating, I start with an accessory that inspires me! Whether I find a must-have pillow, an antique light fixture, or a fabulous home made mobile, I start with a unique object, and then decide on paint color and room direction. Accessorize the crib with pillows that will be on a big girl or big boy bed some day. Choose light fixtures that create unique spaces, and don’t forget about adorable mobiles! Spend your budget on items that you can take with you no matter where you live!

This $85 antique light fixture inspired our daughter's room

Kim of KWillis Design personalized pillows for her new arrival. www.kwillisdesign.com

Hey Now Whoa Now recreated this inspired bird mobile. Make several for a big impact and easily relocate them to a play room when nursery days end! www.heynowwhoanow.com

3. Use furniture Creatively:

Oh please don’t buy a diaper changer!  It may feel like they will always be in diapers, but this too shall pass! This is your chance to customize an antique dresser, use a console table, or even borrow a chest of drawers. Finish the piece off with some cute pulls from Anthroplogie or Hobby Lobby.  When the diaper days are over, you can even move the piece to a different room or into your larger home (after you buy it)!

Can you spot the diaper changer in this nursery? When Berick is poddy trained, his parents can easily use this piece in another room. Thanks, Katie!

4. Toys are Inevitable

I think most parents, before they are actually parents, visit their friends’ home who have kids only to leave saying, “We will never have that many toys for our kids.” You may not have that many, but you will have some!  And you need a cute place to store them! Toys are not what you are thinking about during the nursery decorating stage but they are inevitable. Here are ways to incorporate future storage into the nursery:

• Find an upholstered storage ottoman on Craig’s list and reupholster with a fabulous fabric. If any upholstery project is DIY, it would be an ottoman. Place it at the end of the crib or, if small enough, use in front of your glider as a footrest.
• I love the idea of using clothesline pins to hold baby pics on a metal dress form that will soon hold dress up clothes and art projects. This one from Pier 1 is only $59!
  

  Bows are organized and dress up clothes and tap shoes are easily reached!

I reupholstered this resale store find in a fun houndstooth. The best part? It stores all of those tiny toddler toys!

5. Our Favorite Paint Colors that whisper, don’t scream, Baby

• You probably wonder why I didn’t start with paint colors! Because I first like to decorate around an object that inspires me, I have many paint colors that compliment most objects de vertu. They are from Restoration Hardware’s paint collections. They have all been faithfully tested on Honegger Construction remodeled homes.
  

  Butter Paint Collection

Shore Paint Collection

Silver Sage Paint Collection

According to a Statesman article, “The Austin area study was first done in the fall based largely on 2007-08 data. This year’s study used the most recent figures available and considered student scores on the Texas Assessment of Knowledge and Skills, attendance and participation on college entrance exams and advanced courses. Schools serving a higher percentage of students from low-income families were weighted to acknowledge the challenges associated with educating that group. But much like the rankings Children at Risk released in the fall, schools with lower numbers of low-income students had higher ranking.” (Laura Heinauer)

Find out how your local schools rated here! Are you searching for an Austin home to buy and want to learn more about Austin area schools? We have an in depth Austin Area Schools section that covers everything from home schools to special needs. Check it out!

What qualifies as family friendly?

• Comfort
• Durable fabrics
• Inexpensive so I don’t live with paranoia when I see crayons and scissors!
• Cute!

The first place I turn when looking for something to reupholster? Craig’s List, of course! Austin’s craigslist is usually sufficient, but I always check surrounding areas as well. I decided on slipcovers because you can remove and clean them, so I needed chairs that would look good slipcovered. I found a fabulous fabric that was $200 a yard… then googled around to find something similar for $10 a yard. I chose a durable wool in a darker color that seemed fairly indestructible.  For the added touch of comfort and luxury, I stuffed the bottom cushions with large down pillows. My home has a tiny vintage modern french country thing going on, so I found some fabulously hand printed pillows on Etsy. The result? They actually get sat in! My crewel work chairs are now in the entry way and have a very small chance of getting destroyed!

Cost

chair: $75 (also at IKEA for $100 with no slipcover)

fabric: $40 a chair (8 yards at $10 dollars a yard)

custom slipcover: $100

throw pillow: $25 from Etsy

Bottom Cushion: $18 down pillow

Total: $250 each

Before

After

$200 a yard fabric

Here is a link to all the information you will need for SECO and Austin Energy.

In addition, the Austin Water Utility reinstated the free toilet program to help you improve your water efficiency!

If you are looking to sell your Austin home this year, contact JH Residential for advice on which appliances will bring you the most return on your investment.

We are coming home changed which is what we had prayed. Before leaving,  parenting a strong willed 3 year old and active 19 month old was emotionally wearing on me. I was so intense on my kids’ obedience and behavior (or lack thereof!). After spending time with over 100 children who have NO ONE to say, “Mommy” or “Daddy” to, my perspective towards parenting is more grace filled. Like I know everything is going to be all right with my kids because at least they have us.  They have the same two people in their lives every day telling them the same thing, following the same routine, loving with the same consistent love. This is called parenting and there is nothing very romantic about it on most days of the week. But millions of children around the world don’t have anyone parenting them (about 150 million to be more specific).

I have been to Africa several times and volunteered at orphanages, but never as a parent. The injustice of it all touched me in new places this time. I spent a few days at one babies’ home with 40 children under 2. 40 cribs in one room sleeping, 40 kids in one room eating, 40 kids in one room playing. The mommy in me would just pick up any crying baby and by the end of the first day, it felt like a blur of children. I had to be very intentional about imagining each child as an Amelie or Holden. Only then would compassion flow  more freely. I was told there were over 100 homes in Uganda like this.

The new Watoto babies’ home had JUST opened- before there were 80 kids in one home. Watoto has one of the best reputations in Uganda and the homes were filled with love, toys, and cleanliness. I think the kids got bathed more than mine! Their vision is to raise up the next generation of leaders in Uganda. When the kids turn 2, they go to live in a home with 8 other children and one mother, in a Watoto built “village”. It is breathtakingly beautiful. While I applaud this organization for taking a more sustainable approach to the orphan crisis, it was still heart breaking to be in a “village” of 2,000 children without a mother and father. Joe got work side by side with Ugandans building cabinents and cribs for another Watoto baby home opening in northern Uganda.

Bethany and Moses, who I blogged about previously are pictured below. Bethany has a more mild form of cerebral palsy (I think with therapy she could talk and possibly walk), but because she is an orphan in Uganda, she lives in a babies’ home with very little specialized therapy. Moses, abandoned at the hospital when he was three with progressive hydrocephalus, is also bright. He played some of Amelie’s preschool applications on my iphone one day- puzzles, memory, letters, ect.  Their smiles brought so much joy to me! But all I could think about was my friends’ kids who have special needs that get therapy multiple times a week in their home, school classes just for them, and I even just read of a theme park in San Antonio created only for kids with special needs. I long for Moses and Bethany to have the same sort of care. If you or some one you know is considering adopting a child with special needs, please let me know. Although Watoto does not adopt out, they are considering finding families for these amazing kids! By the way, there were many other kids with special needs there, but these 2 grabbed my attention perhaps because they are so high functioning and would be living a drastically different life some where else.

We LOVED getting to spend time with our friend, Laura, and see all that she is doing for Watoto and Uganda. We also got to spend some lunches and dinners with the Micklers, who have been in Uganda for 4 years with their 5 children. I think they were secretly trying to recruit us because Downie kept telling me how amazing it was to live in Uganda and raise young kids there! If only the internet wasn’t soooooooo slow and impossible!!! We had so many conversations throughout the week with many different people about adoption, sustainable development, Ugandan government, business, orphans, and oil (the largest discovery of oil in sub saharan Africa was made in northern Uganda last year). “We received a baby today found in a toilet. We received a 2 year old last week abandoned by his grandma because he had parasites in his feet.” Life in Uganda is wonderfully intense and the conversations reflect that. Some days, I would just start crying under the intensity of it all.

The ability to adopt children from Uganda is difficult right now due to some wording in the law that is in the process (hopefully) of being changed. Through many conversations during the week, we felt that trying to adopt from Uganda is not the best idea at this time. However, our last weekend in Uganda, we traveled to a town call Jinja, about 1 hour away (well, in our case it was three but that is another story!) We white river rafted in the Nile on grade 5 rapids and this Mama was feeling young again! We also visited a children’s home who DOES adopt and that made our hearts confused all over again.

So regarding adoption, we do feel that we are going to move forward, but we are still unsure about when and how. Being surrounded by so many children and such need did two things for me. I started to count the cost of adoption more. The reality of orphan life and raising a child out of that brought many questions to mind. At the same time, being surrounded by that much need, made Joe and I realize we HAVE to adopt. I know adoption may not by the long term, sustainable solution to the orphan crisis. I, personally, loved hearing about programs that were getting moms on the proper HIV medicine, giving job training and restoring dignity to broken lives. When you save the parents, there is not an orphan crisis. However, because there are orphans and because we will one day come before our Father in Heaven who is going to ask, “What did you do for the least of these?”, Joe and I want to have an answer. We want to have an answer because we answer to a loving Father, who Himself adopted us when we were not looking so pretty. Please continue to pray for us in the journey! And if you know some one looking to buy or sell real estate in Austin, send them our way! Adoption has a high price tag!

Please see more of our photos on Facebook

Samuel, Joe, and I at a children's home. Samuel was abandoned 3 weeks ago by his grandmother

Moses and Bethany

Laura, showing off one of her designs, being sewn by HIV positive women who are being empowered through learning skills.

Claire, HIV and TB positive, being transferred to new children's home. No carseats necessary!

The staff of EcoNation, the business started by the Micklers to empower the poor

As I was playing with a chubby little 14 month old on Monday, the head of the children’s home tells me this child was found strapped underneath a bed and arrived to them at 2 pounds. I would never have guessed it! God is faithful, and I am thankful that He is rescuing His children through faithful followers here in Uganda.

I have always felt that children with special needs in the developing world are some of the most neglected. Sometimes this is on purpose, but many times it is a simple lack of education and resources. I spent time with Moses who was abandoned at the hospital when he was 3 years old with untreated hydrocephalous (a commonly untreated problem in developing countries where water fills the brain. Children’s heads become huge. In the US, it is treated right away and easily fixed). He was brought to the home by the hospital and is full of personality. He is 5 and still isn’t walking YET, but LOVED playing on my iphone and easily completed the preschool apps I had downloaded for Amelie. However, here, he is still in the “babies” home (2 years and under) with no school or regular therapy. Another 5 year old with cerebral palsy also lives at the babies’ home. Her smile is like no other I have seen! There are so many more stories than that but little time to tell them now. And it would take about 30 minutes to download photos, so that will all have to wait until next week!

Joe has been building lots of cribs. I joked that he is living out his man dream while I have been living my normal life multiplied by 70! Lots of changing diapers, feeding, and playing! We have had some intense and amazing conversations with various people and have gotten to spend time with our friends who have lived here for 4 years. They are doing an amazing job training Ugandans in entrepreneurship skills. We will visit more with them tomorrow.

So much more to share! One room has about 4 premature babies (one found in a toilet, another in corn field). So thankful they are getting care! We are madly missing our children but so thankful to God for breathing new perspective in our hearts as parents.

3 year old carpet art!

Art is gone!

As our 3 year old approaches 4, nap times are being replaced by “rest times” which has lead to interesting imaginative play time in her room. It has also lead to exploring with crayons- on walls, stuffed animals, and the carpet. She even dressed up a crayon like a princess the other day. I always take the crayons away and, inevitably, a few weeks later, return them in hopes for no disasters. For the most part, it has worked. But we recently hired a chem dry carpet cleaning company to clean up past messes.

We have always used and recommended steam cleaning companies when listing an Austin home for sale. But often steam cleaning means days off the carpet which is an impossibility with kids. Chem-drying, a carpet cleaning alternative, uses carbonation to extract the dirt and grime and doesn’t use as much steam so the carpet dries much faster. Even if you aren’t selling your home any time soon, cleaning your carpets is an affordable way to maintain your home and help it to feel new!

At the end of the day, the artwork is off the carpet and the upholstery! And really, that is all we wanted! If you are listing your Austin home for sale this spring, read more of our tips about how to prepare your Austin home for sale. Give Austin Chem-Dry a call for a free estimate. We found them to be efficient and affordable.