Welcome to Petra's Columbus Real Estate Blog...
what it's like to live, work and play in the Columbus Ohio Area
One of the first things people relocating to Columbus Ohio often ask me is what’s the weather like in the Columbus Ohio area? People relocating from warmer areas like Florida, Georgia, Alabama and Texas are especially curious about winter weather in Columbus. I’ve had others who relocate to Columbus Ohio from New York, Boston and Chicago areas who wonder how our weather throughout the year compares to theirs? So I’m sharing information from various sources, to give anyone relocating to Columbus Ohio an idea of what our weather is like throughout the year.
Columbus Ohio Weather Offers 4 Seasons for Variety
One of the most wonderful features of our weather in Columbus Ohio, is the fact that we have four seasons. While Columbus Ohio winter weather is not really extreme, since I’m not a cold weather person at all, I most enjoy three out of the four seasons in Central Ohio. Now of course I do enjoy a white Christmas, but other than that, I prefer Spring, Summer and Fall over winter in Columbus Ohio. My son, Isaac, on the other hand enjoys sledding in the snow and creating various snow creatures, so he looks forward to snowy weather. So I’ll start with my favorite season - Spring.
Spring officially starts around March 20 in Central Ohio. March weather in Columbus Ohio really varies. Some years winter tries to linger and it’s not unusual to have one final snow storm in March or rarely in April, before spring can take hold permanently. As the temperatures are warming up, any snow on the ground is typically gone in a day or two. Spring is one of the most beautiful times of the year in Central Ohio because everything is so fresh and green from the spring rain. It’s also my favorite time of the year because there is something so refreshing as you sense the warmth in the air that intends to stay for a while. There’s a certain excitement in the garden in anticipation of seeing what perennial is going to magically pop out of the ground each day and then finally the tulips and daffodils come into full bloom. Spring in Central Ohio is such a wonderful experience to savor. Here’s the “normal” spring temperatures in the Columbus Ohio area.
March: Hi: 51º, Low: 32º, Average: 42º
April: Hi: 63º, Low: 41º, Average: 52º
May: Hi: 73º, Low: 52º, Average: 62º
While these are the normal temperatures, you’ll certainly see some days warmer or cooler than these. I’ve experienced much warmer temperatures, even in the 70’s for April. The Hi is what you’d see during the day and the low is more night time, as things tend to cool down quite a bit once the sun disappears. This applies to any season in Central Ohio.
Summer in Columbus Ohio officially starts around June 20, however, warmer weather typically arrives in May. Swimming pools open Memorial Day weekend and close on Labor Day in September. June and September offer the ideal weather to me, because it’s less humid and comfortable temperatures so you don’t really need air conditioning. The really hot, humid weather tends to be in July and August and that’s when Isaac and I head to Alum Creek Beach to cool off (Yes we have a beach in Central Ohio). Here’s the “normal” temperatures. However, July and August often experience temperatures into the 90’s.
June: Hi: 82º, Low: 61º, Average: 71º
July: HI: 85º, Low: 65º, Average 75º
August: HI: 84º, Low: 64º, Average: 74º
Fall officially starts around September 22, however, the fall colors typically peak in October and November. Fall in Columbus Ohio is such a soothing, peaceful and comforting time of year. The weather slowly starts cooling down as the beauty of the changing fall colors explode. The changing landscape offers an opportunity to slow down after the hustle and bustle of summer to reflect on the significance of life. Of course, Ohio State Buckeye Fans look forward to Fall as the long awaited OSU football season kicks off. GO BUCKS!!! (PS - I’ve been trying to teach Buckeye, my African Grey Parrot, to say GO BUCKS, so far he’s loving the sound of hubba bubba Buckeye better. Maybe someday he’ll get it.) I’ve seen temperatures in the 70’s in October and 80’s in September, but here’s the normal temps.
September: Hi: 77º, Low: 56º, Average: 67º
October: Hi: 66º, Low: 44º, Average: 55º
November: Hi: 53º, Low: 35º, Average: 44º
Winter in Columbus Ohio officially starts around December 21. Who doesn’t enjoy the magical feeling of a white Christmas? Yes we get snow in Columbus Ohio in the winter. The funny thing is, it’s inconsistent enough that if we get more than say 4-6″ at a time, everything shuts down. Schools are closed, the authorities issue a snow emergency and people forget they know how to drive. Isaac just loves snow days . . . a chance to stay home and play in the snow all day with Berkeley, our Schnoodle and the neighbor kids. Columbus is unlike Northern Ohio, where they get Lake effect snow throughout the winter - so they’re used to it. Since our temperatures fluctuate a lot in the winter, when we get snow, it typically doesn’t stay on the ground too long. Here’s the normal winter temperatures:
December: Hi: 41º, Low: 26º, Average: 34º
January: Hi: 36º, Low: 20º, Average: 28º
February: Hi: 40º, Low: 23º, Average: 32º
Natural Disasters in Columbus Ohio
I’ve had several people move to Columbus Ohio from Florida because they are tired of the hurricanes and storms. So they often ask what natural disasters occur in Columbus Ohio? I’ve lived in the Columbus Ohio area since 1969 and I cannot remember there being a tornado that has caused any damage. There have been tornadoes in other parts of Ohio and from what I understand they tend to hit more rural areas rather than the city.
Minor flooding has occurred in few isolated areas, but it’s not really a problem all over Central Ohio. Blizzards are not common, but we have had two that I can remember. I can remember the Columbus Blizzard of January, 1978 when I was a kid as being the worst. I guess there was several inches of snow that fell in Columbus Ohio within 24 hours, but it was the blinding winds and below zero temperatures combined that turned this snow storm into a blizzard. There were lots of power outages and people were stranded in their homes without heat. I remember the Ohio National Guard rescued our family from the freezing cold and took us to a local recreation center to stay warm for a few days until power could be restored.
Columbus Ohio had another blizzard in March of 2008, which didn’t cause major power outages and only caused roads to be closed for a day or two. The Blizzard of March 2008 consisted of a 15.4 inch record snow fall, in a 24 hour period, recorded at Port Columbus Airport and about 20.4 inches of snow piled up altogether. However, since it was March, it quickly warmed up after the storm and melted the snow. So this was nothing like the Blizzard of 1978. Snow storms of this magnitude are quite rare in Columbus Ohio.
Relocating to Columbus Ohio?
If you’re planning to move to the Columbus Ohio area, please CONTACT Petra at 614-895-0496, to receive a custom Columbus Ohio Relocation information package filled with extensive Central Ohio community information, Columbus Ohio Map with suburbs of Central Ohio, CD community tour and more. As an experienced Columbus Ohio REALTOR®, Petra can make relocating to Columbus Ohio easier!
*Weather statistics have been compiled from various sources like accuweather and NOAA, to give you an idea of what Columbus Ohio weather is like. Keep in mind, I do not guarantee the accuracy of this information and mother nature has a mind of her own that no one can totally predict. I have shared this information only to help give you an idea of what it’s like to live in Columbus Ohio.
August 26th, 2008
ATTENTION FIRST TIME HOME BUYERS . . . YOU CAN STILL BUY A HOME WITH NO MONEY DOWN LOANS IN COLUMBUS OHIO.
You may have heard about the Housing and Economic Recovery Act of 2008, which passed in July. While there are many good points to this bill, you know the government had to throw some bad ideas in there too. Supposedly this new law is intended to help prevent foreclosures, restore home values and stabilize housing markets. Here’s what you need to know about buying a home with no money down loans in Columbus Ohio.
FHA ZERO DOWN MORTGAGE LOAN PROGRAMS GOING AWAY
What were they thinking? Among the key provisions of the bill, the program that allowed sellers to provide down payment assistance to buyers through Down Payment Assistance (DPA) programs such as Nehemiah and AmeriDream, will be eliminated October 1, 2008. Buyers will still have the ability to obtain a gift for their down payment from a relative, which is what many buyers relied upon, before DPA programs existed.
HURRY - YOU CAN STILL BUY WITH A ZERO DOWN MORTGAGE UNTIL SEPTEMBER 30, 2008
If you are thinking about buying a home in the Columbus Ohio area in the next year and were hoping to buy with a no money down home loan, now’s the time to move. I have a very reputable mortgage broker in Columbus Ohio who can process a loan in 2-3 weeks, so there’s still time to get a no money down loan. Call Petra at 614-895-0496 today to get started!
GOOD NEWS FOR FIRST TIME HOME BUYERS IN OHIO
While ZERO DOWN mortgage loans are going away for most FHA home buyers, there is still a program for first time home buyers in Columbus Ohio to buy a home with no down payment. OHFA, The Ohio Housing Finance Agency provides Ohio Bond Money, a 3% down payment assistance grant or a 2nd mortgage to cover the down payment. Anyone who hasn’t owned a home in the last 3 years, within certain income guidelines may qualify. Plus the Ohio Heroes program offers lower rates for qualified buyers including veterans, firefighters, police, teachers and health care workers.
GOOD NEWS FOR VETERANS
Veterans who qualify for a VA loan can still buy with a NO MONEY DOWN MORTGAGE LOAN as usual. I have a very experienced mortgage broker who’s been providing VA loans in Columbus Ohio for many years that I can refer to you - just call me at 614-895-0496 to get started. The Bill also contains provisions to help returning soldiers avoid foreclosure including lengthening the time a lender must wait before starting foreclosure from 3 to 9 months after a soldier returns from service.
GET FREE BUYER REPRESENTATION
CALL PETRA AT 614-895-0496, to make your home search easier - AT NO COST TO YOU! I only work with reputable mortgage brokers, lenders and bankers in Columbus Ohio and would be happy to refer you to the best lender for your situation so you can buy a home with no money down and I’ll help you find your ideal home in the Columbus Ohio area too.
SIGN UP FOR PETRA’S FREE COLUMBUS OHIO HOME FINDER SERVICE - to get real estate listing updates via email the same day they come on the market - with all the details including pictures and virtual tours CONTACT PETRA TODAY AT 614-895-0496.
TO LEARN MORE ABOUT BUYING A HOME IN THE COLUMBUS OHIO AREA VISIT: ColumbusCastles.com/Buyers
July 25th, 2008
The media seems to be thriving on publishing so much negative hype about the real estate market, that I thought I’d clarify by sharing a little about the Columbus Ohio Real estate market in particular. But I’m wondering if my title “The End of The American Dream” scares you enough to want to read on? Or does it paralyze you into thinking you should just sit still and not make a move until this storm blows over? Perhaps that’s the phenomenon the media is feeding into?
While I know there are many areas in the United States that have much worse real estate markets than we do here in Columbus, I’m betting that overall it’s not nearly as bad as the media keeps publicizing. I guess they think the American public would rather focus on all the negative like they do? Don’t they think we can handle the truth? Or maybe the media can’t handle the truth because it doesn’t sound as sensational or they think it won’t sell as much? Since it seems like a “so called good story” is more important to the media than telling the truth, I have a hard time believing anything they say. So it seems like the media needs to learn how to do a better job and figure out a way to provide good stories - while still telling the truth. But I guess that’s a whole different story that I won’t focus on any further here.
The truth is real estate is local and all they really should be focused on is talking about the local real estate market as it pertains to specific areas instead of making it sound like their story applies to every market in the US. Here in Columbus Ohio, real estate is selling and inventory levels continue to decline.
The Columbus Board of REALTORS® reported on June 26, 2008, that home sales in the Columbus Ohio area continue to increase each month and that presents a healthy picture of the Central Ohio housing market. As a matter of fact, 2,064 homes sold in May which was a 15.7 percent increase over the number of sales in May 2008. While there is still a large inventory of homes for sale in Columbus and Central Ohio, low interest rates and competitive pricing continue to fuel the Columbus Ohio real estate market. Now maybe I’m crazy, but I think the fact that over 2,000 Central Ohio homes sold in May 2008 alone, sounds like good news? So I’m doing my share to spread this good news.
As a matter of fact, I had a new real estate listing in Northwest Columbus, Upper Arlington area that went into contract in less than 30 days on the market at 97% of the list price. I know first hand when homes are properly prepared and priced competitively they are still selling. In this Columbus real estate market homes need to be in the best condition possible to sell quickly.
In May of 2008 there were 17,900 homes for sale in the Columbus Ohio area, which is a little over 5 percent fewer than May of 2007. There were 4,703 homes added to the market in May which is 8 percent lower than the 5,118 homes listed in May of 2007. The average list price of a home for sale in May was $173,826 which is 3.8 percent lower than the average list price of a home in May of 2007. So the average sales price in May of 2008 was $168,345, almost 4 percent lower than May of 2007. Year to date sales of new and existing homes sold January through May of 2008 total 8,367 which is 14.1 percent behind the 9,737 sales during the same time period in 2007, but only 3 percent behind the Columbus real estate market’s pre-boom period (prior to 2003).
The Columbus Board of REALTORS® just came out with June 2008 statistics which show the Central Ohio housing market is continuing to stabilize. While there were slightly more homes on the market in June 2008 versus June 2007, so far this year there is a 9.2 percent decrease in total homes on the market.
According to Greg Hraback, President of the Columbus Board of REALTORS®, the first half of 2008 has seen increasing home sales and there were 8.6 percent more homes sold in June than in May. Total new and existing homes sold through June of 2008 is 10,667, 14.3 percent behind June 2007’s total of 12,444, but less than six percent behind sales in the market’s pre boom period, during the first half of 2003.
I think the best news is that Central Ohio sales values increased in June 2008 over 7 percent compared to May for an average home sales price of $180,399.
I’ve included a chart provided by the Columbus Board of REALTORS® with the latest sales statistics comparing June 2008 to June 2007 and year to date real estate sales in Columbus and Central Ohio. These sales stats include not only Columbus but all Central Ohio real estate sales for suburbs of Columbus: Bexley, Blacklick, Canal Winchester, Clintonville, Downtown Columbus, Dublin, Gahanna, German Village, Grandview Heights, Granville, Grove City, Groveport, Hilliard, Lewis Center, New Albany, Pataskala, Pickerington, Powell, Reynoldsburg, Short North and Victorian Village, Upper Arlington, Westerville, Whitehall, Worthington as well as Franklin County many of the surrounding counties.
There are some areas in Central Ohio that are doing better than others and I’ve recently included a story showcasing how quickly homes in good condition seem to be selling in Clintonville, Bexley, German Village, Westerville and Worthington Ohio, just to name a few. The areas that seem to have slower sales and have also been hardest hit with foreclosures are those with newer homes where predatory lending practices prevailed - but that’s a whole another story that I won’t get into here.
Since inventory levels are still plentiful, interest rates are still reasonable and there are great no money down loan programs for first time home buyers, now is still a great time to buy a home in Columbus and Central Ohio. Who knows how long the no money down loan programs will still be around, so you should take advantage of this great opportunity while it’s here.
Overall I’d say if you’re not serious about selling, there’s no point in putting your home on the market right now. If you are not willing to properly prepare and price your home for the current market, you’ll only end up frustrated when your home doesn’t sell. As always, if you’d like an honest opinion about selling your home in Central Ohio, please don’t hesitate to call me at 614-895-0496, for expert advice.
As an experienced Columbus Ohio REALTOR® with over $45 million in real estate sales all over Central Ohio, I can help determine your home’s value in the current Columbus Ohio real estate market and make suggestions to improve your home’s condition making it more appealing to buyers. Visit: columbuscastles.com/sellers to learn more about my services for selling your home in Columbus and Central Ohio.
July 18th, 2008
Check out this new Worthington Ohio real estate listing: Single family home at 7623 Yosemite Drive in Worthington Ohio 43085. What a value for a 4 bedroom home in Worthington Schools! Great location close to Worthington Galena and Park Road - less than 5 minutes to the Polaris Mall, Grace Brethren Church and I270 & 23.
Worthington Schools are currently rated continuous improvement by the Ohio Department of Education. However, they have some of the highest test scores among Central Ohio Schools. They met 29 out of 30 state indicators and achieved 102.4 out of 120 performance index points. There aren’t many school districts in the Columbus Ohio area that have over 100 points, so their scores are better than average. If you’d like to learn more about living in Worthington visit: Worthington Ohio Real Estate, Relocation, Schools and Community Guide.
This is not your typical bi-level home. It offers a spacious and open layout with updated kitchen and baths and overall the home is in move in condition. Highlights include:
- Huge 18 X 20 foot family room - perfect for entertaining or large meetings
- Kitchen equipped with a dishawsher, self cleaning gas range, oak wood cabinetry, wood laminate floors, ceramic tile backsplash and a window above the sink adds natural light.
- 2 car attached garage - with easy access to the main level
- Living room is open to the kitchen and dining area.
- Upgrades include ceramic tile & wood laminate floors, wood spindled stairs
- Roomy closets with organizers
- Plenty of storage space too
- Bathroom 1 is updated with granite counter, brushed nickel faucet, wood laminate floors, tub/shower combo with cultured marble surround
- Master bedroom has a large walk-in closet
- Newer roof
- Kids and pets alike will enjoy roaming in the large, private backyard complete with a pond. Lot is about 180 feet deep!
I’ll share a few of the photos of this updated Worthington home below, but if you’d like to see all the details and a virtual tour in a much prettier format, visit: http://www.columbuscastles.com/petras-featured-homes/featured?id=2830097
June 21st, 2008
This is a buyer’s market right? The media keeps publicizing how bad the real estate market is all over the US. So how is it possible that I have come across 4 multiple offer situations in the last month here in Columbus Ohio? Let me share a little more about each scenario to give you a better idea of what the real estate market is really doing here in the Columbus Ohio area.
Client number 1: I’m working with a couple who just recently sold their home in Indiana and are now ready to buy their next home in the Columbus Ohio area. They love older vintage style homes with lots of character, charm and hardwood floors in walking type communities. The husband is a resident at Mount Carmel and Saint Ann’s Hospitals. The wife will be going to OSU to complete the Internal Medicine program. So they wanted areas convenient to Downtown, OSU and Westerville. They decided to look for older homes in the Bexley, Clintonville, German Village and Worthington areas.
We had found a home in Clintonville that they just loved and were ready to make an offer on when it went into contract. There was one other home in Clintonville and 2 homes in Bexley that they also liked and all three went into contract at the same time. All of these homes had been on the market for less than 2 weeks. Even though there is plenty more on the market, most of the other homes are not nearly as nice so they decided to just wait until something new came on the market. Three days ago a new real estate listing came on the market in Bexley and we went to see it right away. It was the perfect home for them so we made an offer right away before anyone else had a chance! They are now very happy to be in contract on this cute cape cod home in Bexley!
Client number 2: I’m working with another couple who have their current home in contract and has to move by the end of July (I’m selling their current home in the OSU/Upper Arlington/Riverside Hospital area). The husband works at Chase in the Polaris/Lewis Center area and the wife works in Westerville. They are also very active in their church which is located just North of the OSU Campus area so they wanted to buy a home somewhere in between these areas. We have been looking for homes in the Clintonville, Worthington and Westerville areas. They’re expecting their 2nd child, so modern day conveniences like a finished basement, 1st floor den and 2 car attached garage are important to them.
They quickly realized you can get a much nicer home for the money in some well established neighborhoods in Westerville. We found their ideal home in Westerville last Saturday. We went back on Monday to see it a 2nd time and were ready to make an offer on it and found out they already had another offer that they were ready to accept. So we quickly made our best offer on this home too, but the seller decided to take the other one because it came in first. This home had been on the market for less than 2 weeks.
Client number 2 again: Okay - I mentioned that I’m also selling their home which is located in the Cranford Subdivision in Northwest Columbus (Upper Arlington, OSU and Riverside Hospital area). Here’s a link to that Northwest Columbus Ranch Home. I always try to provide staging and home preparation advice to my clients who want to sell their home because I know that homes in the best condition sell quicker and for more money. So this client took the time to properly prepare their home for the market. This particular area of Columbus is very popular due to it’s convenient location, on the edge of Upper Arlington, plus it’sclose to OSU and Riverside Hospital. In addition, you can get to Downtown Columbus in about 10 minutes. However, I’ve still seen some homes sit on the market a while in this area, when they are not properly prepared.
Since this home was properly prepared for the market, we experienced lots of showings. After about 2 weeks on the market, we received an offer from someone who is planning to go to graduate school at the Ohio State University (OSU). We had started negotiating with this client when a 2nd offer came in. The sellers had to decide which offer they wanted to take and decided to stay with the first buyer because they agreed to take the home as is. This was appealing to the seller because they are ready to move on to their next home and don’t want to bother with any more repairs on their current home.
Client number 3: I’m working with another couple who are first time home buyers. The husband works in Downtown Columbus and the wife works in the Worthington area. So they’re looking for homes in Worthington, Dublin, Westerville and Gahanna areas. They have some pretty specific needs in their first home - a fenced in yard for their dog and some separate living space for her Dad who is planning to move in with them. So we found a cute ranch home in Gahanna that offered a nice large basement that they planned on finishing for a mother in law type suite for her Dad. Only problem, 2 other people wanted the same home at the same time. That’s right - this home had 3 offers at the same time. Unfortunately, our offer was not the chosen one. My clients offered the most they could afford and that obviously wasn’t enough.
In October of 2007, Forbes ranked the Columbus Ohio real estate market the 3rd most stable in the US. I find that homes are still selling well in many areas of Central Ohio. I think the key in the three homes in Bexley, Clintonville and Westerville mentioned above, is the homes went into contract quickly because they were all in good condition, properly prepared/staged and priced right for the current market. I always say that homes in the best condition will sell more quickly and for more money. Visit http://www.columbuscastles.com/sellers, to learn more.
There are some areas of Columbus and some Central Ohio suburbs that are not selling as quick, but that certainly is not the case everywhere. Some of the areas that are struggeling the most are areas with newer homes that were developed too quickly. Also in some of those newer developments, builders are still building. So it’s very challenging to try and sell your home and compete against the builder’s buyer financing incentives.
Overall, you’ll find the Columbus Ohio real estate market to be doing much better than many other parts of the US and even other areas in Ohio. If you’re interested in buying or selling a home, I’d love to work for you. Please CONTACT PETRA at 614-895-0496 anytime from 8am-10pm EST for personal assistance with your Columbus Ohio real estate needs.
May 30th, 2008
Internet Lender - Legitimate, Swindler, or Identity Thief?
Article as printed in the Columbus Board of Realtors® IN CONTRACT Magazine September 2004
The multitrillion-dollar mortgage industry is a goldmine for cons, scams, schemes and swindlers. The schemes have actually been around for decades, but improved technology has made the scams easier to pull off and enable fraud to proliferate.
Consumers are daily receiving a barrage of e-mail, fax and mail solicitations for advance-fee loans, buyers clubs, credit card insurance come-ons, credit repair cons, internet spam offers and pyramid schemes that can involve work-at-home promises of telecommuting riches.
Results from the Federal Trade Commission’s recently released “Consumer Fraud In The United States” based on a random survey of 2,500 consumers, says nearly 25 million adults - more than 11 percent of the population - are probably victims of fraud in a typical year.
Identity theft and it’s related scams, such as phishing, topped the Federal Trade Commission’s list of concerns this past year. Phishing occurs when fraudsters masquerade as legitimate companies to trick consumers into handing over their personal and financial account information. If you’ve ever received an unsolicited e-mail that appeared to be from Citibank or Paypal and that asked you to update or verify an account, you’ve been targed by a ‘phishing’ scam. So far, financial service companies and their consumers have been targeted the most.
What’s more, 75 percent of fraud related to credit, including credit-repair scams, often target those carrying high debt loads or having bad credit.
Mortgage Scams
One of the greatest concerns for the real estate industry are the scams promoting home mortgages that are artificially low interest rates. Solicitations may even appear to come from the original lender as marketers can get this lender and loan information from the courthouse public records.
Use extreme caution as these perpetrators are often not lenders at all but identity thieves or resellers of application information.
Those 2.7 percent 30-year mortgages turn out to be either short-term “teaser” adjustable loans that allow payments at artifically low rates for short periods, or programs that require a large number of discount points to get the ‘great’ rate.
Jon Sadler, Vice President of Fifth Third Bank has seen this happen all too often. “Borrowers are taken advantage of when these promotional rates turn out to include outrageous closing costs and large pre-payment penalties. In addition, I’ve seen several situations where buyers had their bags packed and ready to go and the deal fell through just days before closing.”
A big cost that may drive up borrower’s costs are yield spread premiums (YSPs). Simply put, they are fees lenders pay mortgage brokers for charging a higher rate to the borrower. By law, they don’t show up until it’s time for you to see the final settlement sheet, typically the day of or the day before you must sign the paperwork (at closing).
YSPs can be advantageous for the borrower that does not have the cash to pay the closing costs that cover the mortgage broker’s fees. But some brokers can take advantage of the borrower by raising the rate so much that the broker is making an exorbitant amount of money on the loan, making it a predatory product.
“It doesn’t take a rocket scientist to make loans to rich guys in the suburbs. But for the rest of the world, it takes a little work,” says Lenny Zangardi, President of Strategic Mortgage Company. “People will buy books and CDs on the internet. They shouldn’t trust the biggest financial transaction of their lives to a random email from a stranger. They need to sit down with a qualified local professional lender to weigh alternatives and determine the product that best suits their needs.”
Consumers who receive dubious offers promising low rates in exchange for personal application information can forward them to the FTC at uce@ftc.gov. Homeowners can also call in complaints at 1-877-FTC-HELP.
Following are some of the more common methods of using legitimate mortgage loan methods to dupe the mortagee into paying higher fees and/or commit outright loan fraud.
Bi-Weekly Mortgages
The bi-weekly concept is simple: Make a mortgage payment every 2 weeks instead of making a payment every month. This is accomplished by cutting your monthly payment in half and make this half-payment every 2 weeks. Because there are 52 weeks in a year, you end up paying the equivalent of 13 monthly payments instead of 12 (26 bi-weekly payments which equate to 13 monthly payments). This forced prepayment will typically reduce a 30-year loan to less than 20 years.
Although many traditional lenders offer this service, they typically do not promote it as the service fees offset the benefit. Solicitations are more often from third party services who will charge a set-up fee ($300-$500) and a per transaction fee of ($2-$3). They might also offer incentives such as grocery gift cards or a discount off the set-up fee if you commit by a certain date. But, keep in mind, if they are offering an incentive, they are getting a greater value in return.
The better solution is to do this on your own. But a payment every two weeks isn’t necessary. Simply take your monthly mortgage payment and divide it by 12. Take this amount and add it to your normal monthly payment and let the lender know the extra is for principal reduction. Otherwise it might end up in your escrow account. In this way, you can get your mortgage debt paid down faster without having to pay the setup and monthly fees.
Zero-Down Loans
Aside from promoting an artificially low interest rate, zero-down loans might be the second most popular way for fraudsters to attract unknowing buyers.
There are a number of legitimate zero-down loans available to assist potential home owners who have little or no down payment saved. Keep in mind that, in exchange for having no money up front for a down payment, the lender will likely charge a higher interest rate and the buyer may have to pay a higher mortgage insurance premium which is not tax deductible.
HUD’s proposed 2005 fiscal budget includes a proposal which would allow buyers to take out no-money-down mortgages insured by the Federal Housing Administration and roll some closing costs into the loan as well. The maximum loan size, then, would be 103 percent of the home’s price.
If approved by Congress, HUD expects a higher default rate on no-money-down loans because they will carry greater risk. But borrowers will be charged a slightly higher mortgage insurance premium to cover the extra risk. After five years, the premium would be reduced to the same rate paid by other FHA borrowers.
However, there is another type of zero-down loan scheme which is both unethical and illegal. This scheme has been around for quite a while and puts the lender at risk. It entails the buyer asking the seller to increase the purchase price by the amount of down payment needed. The seller carries a second mortgage for the increased amount but destroys the note after the closing and the lender is left holding a mortgage on the property for 100% of its value. If the buyer defaults, the lender is stuck holding the bag as there is no PMI insurance to pay a claim.
“Executing a contract in this manner isn’t legal or ethical on a number of levels and concerns not only lenders but appraisers, buyers of other comparable properties and the county auditor among others,” cautions Mark Spangler, Vice President of Mortgage Lending, Prospect Bank.
Reverse Mortgages
Whether seeking money to pay for medical treatment, finance a home improvement, buy long-term care insurance, or supplement their income, many older Americans are turning to “reverse mortgages.” They allow older consumers to convert the equity in their homes to cash while retaining home ownership.
With a “regular” mortgage, you make monthly payments to the lender. But with a reverse mortgage, you receive money from the lender and generally do not have to repay it for as long as you live in your home. In return, the lender holds some - if not most or all - of your home’s equity.
In addition to receiving tax-free income, the other major reverse mortgage advantage is the senior citizen homeowner has no personal liability - repayment only comes from the residence, not personally from the homeowner. No repayment is required during the period provided the qualified homeowner lives in the principal residence at least six months each year. If the homeowner vacates the home for more than 12 months, such as while living in an assisted living center, the reverse mortgage “matures” and becomes due. Of course, if the homeowner dies or sells the residence, then the reverse mortgage and it’s accrued interest must be repaid.
If the sales proceeds are insufficient to pay the amount owed, HUD will pay the lender the amount of the shortfall. The Federal Housing Administration, which is part of HUD, collects an insurance premium from all borrowers to provide this coverage.
FHA’s reverse mortgage insurance makes HUD’s program less expensive to borrowers than the smaller reverse mortgage programs run by private lenders without FHA insurance.
The concern: Older Americans are being targeted by companies charging large fees (6-10 percent of the total amount borrowed) to act as unneeded middlemen. No one needs these services to get a reverse mortgage. HUD gives people the name and phone number of a nearby HUD-approved non-profit housing counseling agency at no charge. The counseling agency gives callers information about the program and tells them how to contact at least three participating lenders. To find a counselor that serves your neighborhood, call HUD’s toll-free number: (800) 569-4287.
People who want to report complaints about firms charging high fees for reverse mortgage information can also call HUD toll free at (888) 466-3487.
Flipping
In the usual case, flipping is nothing more than a legal and lawfull speedy re-sale. For instance, Smith buys a package of five houses from an estate and immediately sells one at a fair market value. Or, Jones buys a property knowing that Green is willing to pay a higher price.
Where flipping becomes illegal is when the re-sale relies on inflated appraisals, fake documents, sales to straw buyers who represent original sellers and phantom second loans. In some cases, illegal flipping involves a series of instant sales and re-sales with a single property and an inside group of buyers and sellers. The insiders move the title back and forth among themselves, in each case raising the sale price and thus creating a fictional basis for larger loans.
Illegal flipping is rare as it leaves reams of evidence, the penalties are severe, and the protective systems evolved by the lending industry work enormously well.
Consumer Reports
Consumer Reports rated online mortgages and published their results in April of 2006. They chose six websites that often came up when trawling search engines for lenders. Three sites Ditech, E-Loan and Quicken Loans act as sales arms for their own mortgage companies. LendingTree, meanwhile collects and distribues leads to outside lenders. But two other sites, HSH and Bankrate, take themselves out of the equation. They act as information clearing houses, listing lenders - including some who pay to appear there with rates and leaving you to click through.
They found that applying for a loan online may mean more hassles and dealing with a lot more salespeople than you would face if you shopped in person. Most important was that they determined that it is possible to find rates in your own backyard that are lower than or comparable to those advertised on the major mortgage web sites.
“On the internet, a marketer only has a few seconds to snag a customer,” says Dave Dewey, Area Manager, Wells Fargo Home Mortgage. “So they throw out the hook but not the whole picture. You have to get enough facts to be able to compare apples to apples. Then compare the loan specifics with a local lender you trust. Remember - the deal that looks too good to be true - probably is.”
What Can You Do?
Know how to recognize marketing pieces directly targeting consumers which is not from a legitimate mortgage broker or lender. When a mortgage promotion states a rate and term, but no “annual percentage rate” (APR) or type of program, that may be a tip-off of a scam and also violates the Truth in Lending Act.
Be very cautious of unknown ‘lenders’ - ESPECIALLY those who show up in your inbox. Even though they may use the name of a reputable lender, perhaps even your own lender, they may be completely unrelated.
Shop around at several online lenders, your credit union, and local lenders in your area.
Ask for the loans contract interest rate, but also the annual percentage rate (APR), which expresses closing costs and the contract interest rate as part of the overall rate. Also ask for a detailed good-faith estimate of closing costs. Some lenders are also offering guaranteed good faith estimates or guaranteed-fee mortgages. Scrutinize them nevertheless. Verify if there is an early prepayment penalty if you were to sell or refinance the loan.
When possible, pay closing costs up front instead of wrapping them into the mortgage to avoid paying interest on a few thousand dollars for the loan’s full term.
Think twice about lowering the interest rate by paying discount points up front, especially if you believe you’ll live in the house for six years or less - the average stay before most homeowners move on.
Rely on your Columbus Ohio Realtor who probably has established relationships with reputable Columbus Ohio Mortgage Lenders to serve your home loan needs.
May 12th, 2008
I keep thinking I should include a helpful tip about house hunting that most people don’t even think about. We have shoes for runnning, walking, relaxing, hunting, working, going to the beach and well you get the picture by now.
I was out showing condos in Powell, Lewis Center, Dublin, Westerville and New Albany today and several of the condos had notes requesting we remove our shoes. Some of the condos were new builds, some were newer and some were, well not so new looking anymore. But still the request to remove our shoes seemed to be common. While I certainly think it’s a great idea to remove your shoes for showings, to help keep floors clean, it certainly can slow down the process of looking at homes.
The buyers I was showing condos to were an older couple relocating to Columbus Ohio from the Knoxville Tennessee area and they found it quite inconvenient to constantly untie their sneakers and remove them. But being from a more polite and compliant generation, they complied with the requests. Then it got a little more interesting when one condo actually had some hospital scrub type slippers that could fit over your shoes. The buyers thought this might be easier than having to untie their sneakers and then put them back on again. Well, imagine standing in the doorway, balancing on one foot while trying to stretch these one size fits all slippers over your sneakers. I consider myself to be somewhat coordinated - I say this because people are always commenting on how gifted I am at doing so many things while driving (you know as a REALTOR® I can’t just drive, I often find myself talking, eating, writing, mapping, etc. all while driving. Of course, I usually count on the lucky buyer sitting in the passenger seat to help keep an eye on the road to make sure it doesn’t somehow dissapear on us. But as coordinated as I am, I still find it challenging to stretch those slippers over my average size shoes.
So . . . In an effort to make house hunting in Columbus Ohio easier for buyers, I’m recommending you consider what shoes you’re going to wear before the hunt. Just like any adventure, the shoes you choose to wear can certainly enhance the experience. Just what would the ideal house hunting shoes be like, you might ask? Simple . . . something that can easily be slipped off and back on again - without untying, yet comfortable enough to climb stairs and treck to and from the house hunting vehicle. Some suggestions include: clogs, sandals and loafers.
P.S. Happy House Hunting
May 3rd, 2008
Welcome to my Columbus Ohio Real estate blog. My goal is to share what it’s like to live, work and play in Columbus Ohio and the Central Ohio suburbs of Bexley, Clintonville, Dublin, Gahanna, Grandview Heights, Hilliard, Lewis Center, Pickerington, Powell, Reynoldsburg Westerville and Worthington. You’ll find the latest information, data and statistics to keep informed on the Columbus Ohio Real estate market as well.
Whether you are a resident or considering relocating to Columbus, Ohio, I hope you find this information helpful in determining where you want to live, work and play in Central Ohio! Having lived in Central Ohio for over 38 years, I know a lot about the Columbus area. As a Columbus real estate agent who’s active in the real estate market, I get around to most of the communities and suburbs in Columbus. So I hope you’ll consider me your guide to learning about the Columbus Ohio area.
As always, if I can be of service in helping you buy, sell or build a home anywhere in Central Ohio, please contact me at 614-895-0496 or visit: www.ColumbusCastles.com to get started.
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