The mortgage industry is full of confusing terms and jargon. Many of the terms apply directly to the forms of loans. The Loans are often referred to by shortened acronyms, but not all. Some are simply put, but not clarified by eligibility. Two most common terms are Government Loans and Conventional Loans.
Government Loans - any mortgage insured by the FHA, or VA, or RHS constitutes a government mortgage. This includes loans to veterans, and home loans available through the rural housing service.
Conventional Loans - any mortgage financing that comes from the traditional lending institutions. This would include any loan made by a bank, mortgage company, or nontraditional owner financing.
So that sounds simple enough right? It should be, unfortunately many of the large mortgage brokerages and companies fail to explain this very simple point, which will lead to some confusion down the road. To further elaborate on some additional options and terms related to loans we have included the following terms:
Assumable Mortgage - A mortgage can be assumed by a buyer once they have qualified for all requirements made by the seller’s mortgage company. This is completed at the time of sale.
Balloon Mortgage - This is when a mortgage is written so the payments are steady for a specified period of time, and at a future date requires the remainder of the total paid in full. An example of this would be a 30 year amortization of a loan that comes due in 15 years. Payment until the 15th year may be around 500 a month, however on the date determined the remainder of a 100 thousand dollar loan becomes due in full.
VA mortgage aka VA Loan - a mortgage insured by the Veterans Administration. This applies to qualified veterans only, and encourages private mortgage lenders to write loans for military and former military personal.
Potential home buyers might be inclined to run screaming from two small words: “As Is”. This phrase can signal anything from a house that’s falling apart to one where the seller is just not in a position to make disclosure on an otherwise perfectly good property. An article by Dian Hymer attempts to take some of the fear out of this tiny phrase.
“As is” can have several different meanings. It could be the property was inherited and the heir is unable to inspect and make disclosure on the house. The label on an inherited property is put there to protect the heirs from liability.
A bank foreclosure is usually sold “as is”, as the bank is not in a position to inspect the house. However, a homeowner who has not been able to make mortgage payments, may not have had the funds to keep up with maintenance either.
It could also be subject to regional regulations. California, for instance, advertises most homes in “as is” condition. This only means the seller won’t warrant the condition of the property and it’s strongly suggested that the buyer retain a professional inspector.
It could also pertain to a property that needs major repair. In the current buyers’ market, the purchaser is not as willing to accept the “as is” condition without a significant drop in price.
The bottom line is a potential buyer could get a good deal on an “as is” home, but he or she should conduct a thorough, professional inspection of the property and be prepared to make what could be major repairs. Buyers are also encouraged to make sure they have the option to withdrawal from a sale without loss of deposit should the property need more attention than they’re willing to give.
As Texas is a non-disclosure state, I’ve never liked Zillow. People who think Realtors do nothing, but schmooze and collect paychecks love Zillow, because they feel it empowers them to do their own home sale. In reality, since non-disclosure states do not disclose all sales prices, Zillow often gives poor data because (1) it only has sparse data to give and (2) a computer program is never going to be able to select comparable sales as well as a human who can go and physically view the property and adjust subjectively. So basically, Zillow, while it may be fun, is completely unreliable here in Texas.
But what about Zilpy? It’s a terrible name, but I thought I’d check it out. I compared the data provided by Zilpy for three apartments and condos that I know the rental rate and occupancy for in Austin to gauge the usefulness and accuracy. It was remarkably accurate for all the places that I checked. Granted, the site doesn’t appear to delineate by class of dwelling, but the ranges it gives help make it seem more accurate.
If you have a rental, check it out and let me know what you think. I’d love to hear from you.
Excerpt from Inman News.
Zilpy, the new ‘Z’ site in online real estate
Web site offers rental price estimates
Thursday, February 07, 2008
Inman News
Zilpy is like Zillow for rental properties, with rental price estimates, demographic data and heat maps based on median rental rates.
The new Web site, which launched last week and lists Zillow as a partner company, offers competition to Rentometer.com, another site that allows users to gauge rental prices in a selected area.
Zilpy.com is not a rental listings site. It is a rental research site that allows users to grab automated rental price estimates by address, city or ZIP code, and to refine searches based on type of rental property, a desired rental range, number of bedrooms and a range of square feet. One of the founders referred to the site as “the Trulia for the rental market.”
The heat maps show areas with higher and lower rental prices — red zones feature the highest median rental prices, while dark green shading indicates the lowest rental pricing.
…
Screen shots from Zilpy.com
Well sometimes everyone makes a mistake… But to misrepresent the school district that your new home is being built in is either evidence of a very slimy representative or an extremely incompetent one. Either way it’s not something that you’ll want to add to your resume. 
Kathryn points out some great tips at the end of the snippet below. Mainly, make sure that you have an agent working in your best interest. In Austin and the surrounding areas, buyer agents are typically paid for by the seller, but represent YOU. It’s also hugely important that if a salesman looks like the guy in the photo above that you seriously reconsider signing at that time!!!
One item that’s not in the list below that is always a good idea is including the builder’s representations in the contract. If they won’t allow that, then it would be best to have the builder’s representative sign the documents so that you have a copy of the papers that confirm the representations. In Texas we have a very strong (well it seems strong to me, but I’m no lawyer) Deceptive Trade Practices law. Think treble damages and lots of other scary things that could happen to people who are found guilty of deception.
Excerpt from Charlotte Observer.
Homebuyers say builder misstated school district
2 Pecan Hills buyers released from contract
KATHRYN THIER
Alisa Frady put down $20,000 in earnest money for a new home in Mooresville in the Iredell-Statesville Schools, the same district her children now attend.
But it turns out that the Pecan Hills subdivision is in the Mooresville Graded School District.
Frady and others say Ryan Homes, builder of Pecan Hills, gave them wrong information.
…
Tips for homebuyers
• Call the school district to confirm which district serves the home you intend to buy. You must provide an accurate address.
• Remember that individual school attendance zones may change. But district boundaries rarely change.
• Engage a real estate agent to represent you. Don’t rely on the seller’s agent to represent you.
I was watching an HGTV real estate show yesterday and I finally got around to posting about oneof the things that the sell this house-type shows do, that are kind of hokie. In this particular episode, the sellers were getting ready to sell their condo. The condo was terribly dated and had low end appliances. The designer came in and proceeded to cover the appliances with a stick on faux stainless steel veneer. In the show, the owners did replace the stove and microwave vent hood with real stainless steel appliances, but when they had the open house they let the prospective buyers comment on the wonderful stainless steel appliances and didn’t correct them or inform them that only two of the appliances were stainless steel and that the dishwasher and refrigerator were actually covered with the veneer.
Granted it’s a tv show, but I think that some people out there might think that it’s acceptable to use this stick on and then advertise stainless steel appliances when they are actually not stainless. I’m not a lawyer, but if the appliances looked like stainless and were advertised as stainless steel and after the sale closed the buyer found out the appliances were covered with veneer and not really stainless, I’d be seriously worried as a seller or listing agent. I think the veneer is a neat product, but if you play above board you’d have to advertise it as something like “faux stainless steel” appliances. In the last 5 years of selling residential real estate, I’ve not run across anything like that, but I know I’d really pause if I read “faux stainless steel” on a brochure. I think it might work for some properties and it may look great, but some research will show that it is only heat tolerant to 122 degrees Fahrenheit. 122 degrees is not very hot and I think dishwashers and stoves could damage the faux finish because they may get hotter than that.
Bottom line: If you try this technique to update your appliances be sure to disclose what you did to the prospective seller and avoid misrepresenting the appliances. It could be a costly mistake.
If any agents, brokers or owners have used the veneer and have feedback or know more technical information about it, I’d love to hear from you.
The mortgage industry is full of confusing terms and jargon. Many of the terms apply directly to the forms of loans. The Loans are often referred to by shortened acronyms, but not all. Some are simply put, but not clarified by eligibility. Two most common terms are Government Loans and Conventional Loans.
