Who or what is Fannie Mae?

You could argue that if Fannie Mae had been around, George Bailey’s Building and Loan would not have been in trouble, despite his absent-minded Uncle Billy, and he would not have needed an angel and the whole town to bail him out.

It would still be a wonderful life, but perhaps not as dramatic a life.

Fannie Mae’s real name is the Federal National Mortgage Association and it is a federally charted corporation, owned by shareholders, that has one main mission: To make sure there is enough money around that any American who has the resources to buy a home can get a mortgage. But not just any American can pick up the phone and call Fannie Mae.

When you get a mortgage from your local lender, the lender is the one who will be in touch with Fannie Mae. Your local lender wants to make loans, because it makes money (interest) on loans. But each local lender can only make just so many loans with the money it has available. That’s where Fannie Mae comes in.

Thanks to Fannie Mae, your lender doesn’t have to wait 30 years until you pay off your mortgage so that it can make a new loan to another family. Instead, your lender can sell your loan to Fannie Mae, make some money on the loan, and then loan someone else in your community money for a home.

Fannie Mae makes money because it can borrow at the best possible rate, a better rate than you get on your mortgage. Fannie Mae buys your mortgage for a lower rate than the lender is charging you, then holds your mortgage (or maybe even sells it again) until you pay it off.
In the meantime, you keep right on paying your local lender, just as you have always done.
Of course, Fannie Mae is the mega player in the mortgage paper world. It makes still more money by packaging up your loan with others and selling it in a bundle to investors, pension funds and other groups. Fannie Mae guarantees that the investors get their money, even if you default on your mortgage.

This is where Fannie’s government relationship comes into play. If a vast number of people default at one time and overwhelm Fannie Mae, then she has a great ace-in-the-hole: Your tax dollars. The U.S. government has never explicitly guaranteed that if Fannie Mae failed, tax dollars would be used to prop up the corporation. But most people think that is what would happen.

Today, more than 70 percent of American families own their homes. Not a bad track record, even though Fannie Mae is often criticized as a titan that fights regulation and uses its own size and complexity to avoid close scrutiny.

BUY OR BUILD?

It’s a lot to consider! If you’re considering new construction, the first item on your To Do list is to find a suitable lot. The experience of builders and architects points to a few key features you should investigate in your search for the perfect spot.

First, and perhaps most obvious, is the size of the lot. The larger the lot, the greater the cost, depending on location. Consider the property taxes and how much maintenance it will require. Remember that the smallest lots tend to appreciate more quickly than their larger neighbors on a square foot basis.

Next, imagine how the terrain will affect aspects like drainage and the positioning of the home. Ask your builder to explain the impact the terrain will have on your plan.

Related to the terrain is the view the property offers. Take great care in discovering how adjoining land will be developed, and how that could affect your view. A gas station may one day be built on that beautiful meadow out back.

Make sure you check with the local government zoning and building department. There may be restrictions on the size and location of any structure that may be placed on the lot. And don’t forget the impact fees that you will be charged for new construction.

And finally, the mantra of real estate is “location, location, location.” Want a faster commute? Buy a lot near the entrance of your subdivision. Want to keep your kids safe from traffic? Then plan a purchase further toward the back.

Much of this is common sense, really, but it helps to take an organized and educated approach to this critical element of home construction.

Understanding real estate dilemmas and their solutions is our business, and we’ll happily share our knowledge with you. Why not give us a call at (772) 323-6996 or visit us on the web at www.TreasureCoastFLHomes.com. Our office is located at 1121 SE Ocean Blvd. in Stuart, (Sewall’s Point) Florida; please ask for Gabe Sanders or .

LOOKING BEYOND THE PRICE!

What pops in your mind when you think of a real estate contract? The price, right? It’s the critical term, but far from the only important factor to be considered by buyers or sellers. There are costs, finances, conveyances, and consequences to consider.

Typical costs include commissions, inspections, legal fees closing costs, title insurance, and so on. Your representative should firmly negotiate and explain who pays for what.

How about the escrow deposit and financing contingencies? Unless the buyers pay cash, an escape clause should release them from obligation if financing falls through. Specifying that the loan will be secured at a certain interest rate or lower provides further protection.

Also pay close attention to conveyances of personal property, such as some appliances, lighting or window treatments, or furnishing. Avoid argument and further negotiation by assuring there is zero confusion about what is included in the sale price.

Another factor that should be clearly spelled out is the consequences of a breach in contract by either side. This is a binding legal document, whereby buyers in breach can lose their deposit, or sellers in breach can be sued for “specific performance” to force the sale of the home.

It’s best for you and your representative to review a standard contract before you make or consider a purchase offer. Understanding real estate contracts and their implications is our business, and we’ll happily share our knowledge with you. Why not give us a call at (772) 323-6996 or visit us on the web at www.GabeSanders.com. Our office is located at 1121 SE Ocean Blvd. in Stuart, (Sewall’s Point) Florida; please ask for Gabe Sanders or .

OPPORTUNITY IN ANY MARKET!

Whether the market is up or down (and particularly if it’s down), buying a “fixer-upper” and updating it can prove to be a profitable venture. As with any real estate investment, however, it’s wise to enter with eyes wide open. Knowledge and caution will help you avoid common pitfalls.

The ideal candidate for such a purchase would be priced roughly 30 percent below the value of nearby homes, and located in a community with low crime rates and good schools. The only thing you can’t repair or improve is a poor location.

And just because you can improve almost anything doesn’t mean that you should! Avoid homes in need of truly major (and unprofitable) repairs such as the foundation, structural plumbing, or complete kitchen and bath renovations. Because these features are simply expected by buyers, they won’t necessarily add any value to your offering.

Another aspect that is often overlooked is your fixer-upper’s proximity to where you live. Keep it within an hour’s drive, because you’ll want (and need) to check in regularly, probably daily, while your repairs and renovations are in progress. The cost of fuel is high enough these days that you don’t want to blow your profits on your gas tank!

There are many fine homes being offered at lower prices by motivated sellers. Don’t overlook the opportunity these properties present!

Understanding real estate dilemmas and their solutions is our business, and we’ll happily share our knowledge with you. Why not give us a call at (772) 323-6996 or visit us on the web at www.GabeSanders.com. Our office is located at 1121 SE Ocean Blvd. in Stuart, (Sewall’s Point) Florida; please ask for Gabe Sanders or .

IT TAKES MONEY TO SAVE MONEY!

Okay, you’ve found the home of your dreams. You’ve determined how much you can afford because you’ve already been pre-approved by your lender, and your offer has been accepted. But wait. If you’re financing the purchase, like almost everyone does, you’ll actually be paying more than the final sale price of the home.

Many buyers don’t stop to think about how much they’ll really be paying for their home by the time they’ve reached the final payment. It’s worth considering, and it makes it evident that you should shop around and get the best loan terms possible.

Be sure to discuss your options with a trusted local real estate agent, who can provide mortgage information, illustrate different financing options, and even recommend lenders suited to your needs. With literally hundreds, if not thousands, of options available, it’s helpful to begin with the basic facts to help you whittle down your choices.

Determine how much is available for a down payment. If you’re putting up less than 20%, you’ll need a guarantee that often comes in the form of PMI (private mortgage insurance). This will add to the overall cost of your loan, at least until you’ve paid off a significant percentage.

Again, discuss your loan options with your real estate agent before you make any offers, in order to avoid unpleasant delays and unexpected expenses.

Understanding real estate dilemmas and their solutions is our business, and we’ll happily share our knowledge with you. Why not give us a call at (772) 323-6996 or visit us on the web at www.GabeSanders.com. Our office is located at 1121 SE Ocean Blvd. in Stuart, (Sewall’s Point) Florida; please ask for Gabe Sanders or .