Month: January 2010

What the heck is RESPA and why should I care?

Posted on by Teresa Boardman

Does anyone know what RESPA is?  I have to know so that I don't break any laws and lose my real estate license.  I get information and training but that doesn't help home buyers very much, often by the time I even meet them they have already met with a lender.  Consumers who never heard of  RESPA don't know the rules and they don't know if a lender, Realtor or closer are breaking them.

The Real Estate Settlement Procedures Act (RESPA) is a consumer protection statute, first passed in 1974. The purposes of RESPA are

  1. to help consumers become better shoppers for settlement services and
  2. to eliminate kickbacks and referral fees that unnecessarily increase the costs of certain settlement services.

Simple enough yet complicated.  This year the Feds have rolled out a new Good Faith Estimate form that everyone likes to call a GFE, shorter I know but the words "good, faith & estimate" are more meaningful.  They mean that when you meet with a lender you can get a good faith estimate of what your total costs on a home loan will be and you can compare the costs of two or more loans.  Now they have to use a special form and their estimates have to be pretty close to what the actual costs come out to be and the Good Faith Estimate has sections that match up to the HUD-1.

What is a HUD-1?  it is a government form that is used at settlement and settlement is when you close on a house.  it means you settle up, you sign a bunch of papers that mean you will make mortgage payments and you get the keys to your house, all on the same day. 

Here is a section from the good faith estimate form:

Respa1

If you click on the graphic you can see if better. The form spells it all out pretty well as long as the borrower understands that the monthly payment will probably include 1/12th of the property taxes for the year and 1/12th of the home owners insurance.  The actual house payment will be higher than what shows up on this part of the estimate. 

The new Hud-1 still looks like it was made by the IRS but it has been improved a little.  It is now possible to match up some sections on the settlement statement with sections on the good faith estimate.

This is all well and good as long as the borrower understands it all.  If they don't it doesn't do much.  Reading up on RESPA and having an understanding of what to expect from a lender or a closer is a good idea but most people don't know anything about it. 

The best source of information is through the Federal Government and they have pages of information on the internet. 



The legend of the covered wagon

Posted on by Teresa Boardman

Uncovered-wagon

The covered wagon, which I should call the uncovered wagon is parked just off the street on West 7th street at Thurston right next the new Mississippi Market.  It has been parked there since 1853 when pioneers traveling to the West found what was to later become part of frontier St. Paul Minnesota and decided to stop.

It was on a Sunday and when they looked around they decided they wanted to live here. In those days what is now West 7th was called Fort Road and it went out to Fort Snelling which was the only settlement around. There were some houses here and there and no one heard of that new city Minneapolis because it wasn't invented yet.   They roamed around looking for open houses but there weren't any because there were no houses in the area.  They ended up building one.

No one knows for sure why they left their wagon or what happened to the cover, or the horses but it was parked before the parking ticket was invented and before we had all of those no parking signs so it was grandfathered into the system and is allowed to remain where it is.  It will remain there until the end of time.

4 Comments

Being a tourist

Posted on by Teresa Boardman

Every year during the winter when it is too cold to take pictures outside I go inside and take pictures of the state capital building.  There are usually other tourists in the building and I often here comments from people who had no idea that the building was so beautiful and that they should have seen it sooner. It is easy enough to go to the state capital. The building is open almost every day.  There are tours every hour and self guided tours any time. It really is worth the trip.

Stairway

Dome2_edited-1_wm 

IMG_9192w_wm

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How not to price a home

Posted on by Teresa Boardman

Homesweethome Sellers are much more realistic about the value of their homes than they were a year ago.  In early 2009 when I gave home owners a value the number was often met with shock and dismay.  Most home owners have caught onto the fact that if they bought their home in the last decade it may not be worth more than it was when they bought it and may even be worth less.

Yet there always have been and always will be sellers who determine the value of their home by how much they need.  They figure out how much they owe on it, what their selling expenses will be and maybe how much they need for a down payment  on a home and add it all together and that becomes their asking price. The number has nothing to do with how much a buyer will pay for a home or how much an appraiser will say that is is worth. Yet that is how the price is set.

The amount owed on the home or what was paid for it has nothing to do with the current value, neither does how much money the seller needs.  As a home owner myself I have had to come to grips with the fact that my home was worth more money in 2006 than it is worth now.  I also know that I could buy another home for less than I would have had to pay for it a few years ago, that takes some of the "ouch" out of the new value, but not the higher taxes.    If  you set your price by how much money you need and that amount is more than your home is worth to a buyer, it is simple, you will continue to be a home owner but not a home seller. .

I think I write this post or one just like it every year. . . see ya next year.

2 Comments

Hither and Fro

Posted on by Greg Sax

by G. Sax (@gsax)

Downtown Saint Paul in OrangeHey, yo. I blew off my weekly guest post last week because I went to New York City for a real estate conference. It's the kind of conference Teresa would normally go to, but she skipped this one and was missed dearly.

Not by me, of course. We're like vinegar and water, us two. But this conference was teeming with her fans and friends. It's a trip to go to the most populous city in the country and get hung into conversations about Teresa Boardman. Same thing happened on the left coast in San Francisco last summer. The woman's got a way.

I don't really get it. And honestly I don't even know why she lets me sully her blog with my occasional sniping. Maybe it's because she appreciates the transparency of me because she, too, practices the art of "say what you mean and do what you say." Maybe it's because I'm earnest in my support for Saint Paul and for exceptional quality in local real estate practices. Maybe it's just because she needs a day off every now and then and I'm just the fool to blithely fill in.

And maybe it's because she knows I'm a good egg and I'm just teasing for humor and effect. Fridays may be for fun but a G. Sax Wednesday means a categorical "just for the heck of it."

I have this tendency to meander hither and fro in my topics, and I sometimes stomp on the things she's become known for both locally and nationally, like providing real estate statistics (I'm also good at this) and cool photos of Saint Paul (I'm not so good at this but I do it anyway). I mean well.

And I know she does, too, so I'm honored to pop in and ruffle things up and say hey, yo.

On a couple of side notes (remember, I meander):

1) My trip to New York reminded me just how wonderful public transportation can be, even here in the land of I-496949694. When I got back to MSP, I made it a point to use public transportation to get to my front door. Two buses, one transfer, $2.25. We may not be DC, NYC, or SF, but Metro Transit is pretty clean and efficient.

2) Support downtown Saint Paul over the next couple of weeks, okay? The Saint Paul Winter Carnival starts tomorrow. There are great parades the next two Saturdays. Buy a button and get discounts on all sorts of good stuff. And take a look at those buttons this year. (Plug alert) The Saint Paul Bouncing Team is featured on one of them! I'm the President of the team this year, so it's a terrific honor for me personally. Look for us on local television tomorrow morning (WCCO, FOX, and KARE!), in the parades, and at the Landmark Center for our annual tryouts on January 29. Many people consider us an integral part of the city's fabric. I'd like to think so.