Article 1 (The Best News in 1999 for Buyers of Real Estate!) Article 2 (What Is Going On With The Market These Days!) Article 3 (Q&A with Michael Merrill)

The Best News in 1999 for Buyers of Real Estate! By Sara Rosenfeld, Sr. Vice President, Co-Manager of Hunneman-Coldwell Banker If you have decided 1999 is the year you are going to be a homeowner or you are still thinking about it, here is some very valuable information. The best news in 1999 for buyers is that FNMA (Federal National Mortgage Association), the "rule makers" of the mortgage industry, have made some very important changes to the guidelines for conventional mortgages. A conventional mortgage has limits for the amount of money you can borrow on a loan. If the mortgage amount exceeds this limit, the loan becomes a Jumbo mortgage. If you read the current mortgage rates and there is an interest rate quote, this rate usually reflects the conventional mortgage program. For instance, if the rate is advertised at 7% and 1 point, this is for a conventional mortgage. If the mortgage is a Jumbo loan, there is a higher interest rate charged and possibly more points. A point (1% of the mortgage amount) is the origination fee for placing the loan and is considered part of the closing costs. Prior to January 1, 1999, the upper limit for a conventional mortgage for a condominium or single family house was $207,500. This meant, if your mortgage amount was anything higher than $207,500, you would be charge the rate and points for a Jumbo mortgage. Starting January 1, 1999, this upper limit was raised to $240,000. Here is why this is good news for many buyers. For instance, if you purchased a home for $250,000 and put 10% down ($250,000), your mortgage amount would be $225,000. If the rates were 7% and 1 point for a conventional mortgage and 7 1/2% and 1 1/4 point for a Jumbo loan, there would be a significant savings for a 30-year mortgage. The principal and interest for the conventional mortgage of $225,000 is $1,496.93 and $1,573.23 for the Jumbo mortgage. This is a saving of $76.30 per month, $915.63 per year, and $27,468.95 for the life of the 30-year loan. The difference in the point amount is 1/4 of a point resulting in a $562.50 savings in the closings costs. The upper limit for a conventional mortgage was also raised for 2-family, 3-family, and 4-family houses. The upper limit for 2-family houses is now $307,100. The upper limit for a 3-family house is now $371,200 and $461,350 for a 4-family house. If you had met with a mortgage loan originator prior to January 1 to get pre-qualified or pre-approved for a mortgage, I strongly recommend that you call them to review your numbers. Interest rates have also changed, so you may be in for a nice surprise! You may be able to purchase that home at a better interest rate and reduced closing costs! It is very important that you review this information carefully and if you have any questions, contact a mortgage specialist. We have a Hunneman Mortgage Representative, Richard Schultz, in our office to answer any of your questions, provide you with a pre-qualification or pre-approval letter and guide you through the mortgage process. You can call Richard at anytime at 617-796-6101 for an appointment at your convenience. Good luck and remember that this is a great time to buy a home!

What Is Going On With The Market These Days! For the past 24 months, Realtors have been complaining about the lack of inventory. All across the board from inexpensive condominiums to half a million dollar homes, the consensus is that there are more buyers than sellers and properties are moving at a very swift pace. Let us look at what is causing this phenomenon in real estate! This phenomenon can be traced to many variables that have been seen in the last couple of years. As we all know, real estate moves up and down in value. Historically, real estate has been and will continue to be an excellent investment. Therefore, as the market surged and prices skyrocketed in the mid 1980's, the late '80's and early '90's witnessed prices pulling back and recent owners ended up paying dearly for the surge in home sales. So what do we have now one may ask? In simple terms the excitement of real estate is caused by a combination of positive elements and very few negative signs. For instance, the low interest rates have caused a surge of first time buyers that now can enter the market. And like a domino effect, activity spurs activity. So as these first time buyers purchase their first 3 bedroom home with inexpensive financing and relaxed ratios, the full-grown family can now entertain an opportunity to move up and purchase the 4 bedroom, 2.5 bath home on a half acre! In addition to these circumstances, so called financial experts have been excited about the future. Low unemployment, high stock prices and continued growth in many different industries has heightened hop amongst the most pessimistic of them all. Whether you agree their outlook is strong. This obviously will assist in causing prices to move up because of the number of buyers and the lack of the inventory coupled with favorable feelings of the economy. The simple law of supply and demand is now in place and across the board prices have soared since the early 1990's! Another area that has caused a lack of the inventory is the refinancing boom that has played a major role these past few years. For instance, when talking with individuals about their thoughts of moving up to a large home, they can now add a family room, reduce their monthly payments through refinancing to a lower rate, and still enjoy their fabulous neighborhood! There are also many theories proposed by market and trend specialists. Many believe in the Baby Boom Theory that basically believes that where the greatest strength of buying power lies in that the industry will flourish. As an example, one might say why hasn't the Dow dropped yet? In theory, 401K money is coming in from the baby boomers like gangbusters and it has been forecast that there is no sign of stopping until 2009! And isn't this the age of boomers who purchased the share of the homes in the mid '80's? This theory watches the group aged 35 through 46. This age is known as the baby boom and many trends are attributed to this event. Whether or not you subscribe to this theory, it is by my account interesting reading and answers many questions. Please contact me if you would like more information regarding which specific segments reference our real estate boards.

Q&A with Michael Merrill of Merrill & McGeary, a real estate attorney. Q: I intend to sell my condominium unit to a friend. There will be no real estate broker. How do I go about this process and what additional work should I expect in order to make the sale occur. S.T., Boston, MA A: You can buy and sell real estate without the services of a real estate broker if you wish. However, you should know that real estate brokers provide a number of different services in the course of a real estate transaction which are valuable to their clients. These include not only finding a buyer or appropriate property but equally importantly guiding the transaction to a successful conclusion. An experienced real estate broker is well worth the commission in most cases. Notwithstanding that advice, since you already have a buyer, you can process the sale of your unit with the assistance of a real estate attorney. Initially, you and the buyer should sign an offer to purchase which sets forth the essential terms of the deal. Your attorney should be able to give this form to you and explain how to fill it out. The next step will be for you to deal with the buyer's home inspector and resolve any issues which may arise from the inspection. Simultaneously, you should be prepared to provide the Buyer with a complete set of condominium documents and the condominium's budget. When the inspection has been successfully concluded your attorney will draft the purchase and sale agreement and work with the buyer's attorney to complete the agreement. Your attorney will hold the deposit pending the sale. After the purchase and sale is signed you should monitor the buyer's mortgage financing and make sure the financing will be approved in a timely fashion. When the financing is approved the buyer's lender's attorney will be selected and your attorney will deal directly with that attorney to set up the closing. Prior to closing you will have to obtain the smoke detector compliance certificate, 6(d) certificate, insurance certificate and unit deed. Once again, your attorney can provide advice to you in order to accomplish these tasks. Good luck. Michael W. Merrill Q: Typically, the real estate market has a surge in the spring. As you know, the market in this area has been hot with a significant increase in the sales of houses and condominiums. Prices have also been strong. Do you have a prediction for the real estate climate in 1999? B.W., Cambridge, MA A: As long as interest and unemployment rates stay low and the stock market remains somewhat stable, the real estate market will be strong. With these good economic indicators buyers will have the necessary confidence to purchase homes even with the current high sales prices. Sellers will, of course, benefit from this environment. I believe 1999 will be similar to 1998, a year of increased sales and prices. Check back in June and we'll see whether or not my crystal ball was accurate. Michael W. Merrill