A real estate firm in Ohio is offering clients a sweet deal. If you buy a home using their agents and their mortgage company, they will pay your mortgage for six months if you lose your job.

By now you've probably seen the car companies doing something like this. And, I know of some builders with similar programs. But I've yet to see a real estate firm try this.

In Ohio, this is not a small commitment. The unemployment rate in Ohio is one of the highest in the country and will likely continue to rise given the number of auto-related jobs in the state.

So, hats off to Real Living HER for taking this gamble! I'd love to see a local firm in Northern Virginia step up and try this. It's far less of a risk here and this market could definitely use a little more innovation! And, with 90%+ of the real estate agents locally telling you it's a great time to buy (for at least the last three years!) I'd love to see them put their money where their mouth is!

I don't know that someone who wasn't going to buy is now going to because of this offer. But if you're going to buy a house anyway, seems like you'd be crazy not to use this brokerage.

LATE UPDATE: My apologies to the local firms who have already stepped up and are offering similar programs! (Google let me down on this one!) Long & Foster and REMAX Regency (Warrenton & Manassas offices) are now offering this type of program. Kudos!

With more and more families locally going through foreclosures or short sales, the question is going to become, when can they get another mortgage?

Well, we finally have some guidelines from Fannie Mae, Freddie Mac, FHA and VA. Courtesy of Beth Goodwin at First County Mortgage, here's what they look like:

You can also reach Beth on her e-mail at beth.goodwin@firstcountymortgage.com

I had lunch with a number of business friends the other day and, of course, the conversation turned to the current real estate market and then to the actions currently being contemplated by Congress to fix it.

Every fix seemed to have a down side for someone. And, then one of my friends stated what was staring us all in the fact. "I guess no one said it was going to be fair."

 What I'd like to see is everyone staying focused on the larger picture, rather than whether someone else is going to get a "better deal" out of any particular piece of legislation.

If your neighbor got himself in trouble with his mortgage and the government helps him out, one way to look at that is that he got bailed out for his recklessness or stupidity and that you got no reward for being a responsible adult.

But the other way to see this is that if his house goes into foreclosure, your property value declines. And, if several houses in your neighborhood go into foreclosure, your property value declines steeply, crime rises in the neighborhood and a whole host of bad things follow!

While it may be more morally satisfying to watch people get what they deserve, it is also, in this instance, cutting off your nose to spite your face!

Sometimes, looking out for your neighbor turns out to be a good thing for you too!

In the comments on a recent blog someone asked why someone who pays cash has more negotiating leverage. I answered briefly in response, but thought it made sense to cover it in more detail in a blog post.

There are several reasons you're in a stronger negotiating position if you're buying with cash.

First of all, many deals never make it to closing. Even when there's a ratified contract, that's no guarantee that the deal settles. And, over 95% of the time, deals that fall apart do so because of issues related to the buyer's financing.

If you can remove that concern for the sellers, they are likely to take a lower offer, trading price for the certainty of a closed sale.

Another factor is time. Typically right now it's about 30 days in most cases from ratified contract to settlement. The majority of that time is spent on items required by the lender. Some of those things include getting a survey, having the property appraised, verifying credit and employment for the buyers and sending the deal through underwriting. It's possible, these days, for most lenders to close much faster, say in two weeks. But in most cases if they buyers are getting a mortgage the settlement date is probably about 30 days out.

With cash, on the other hand, settlement can happen as quickly as the buyer wants. I've seen cash settlements in less than 48 hours. Mind you, I wouldn't recommend that. I think the buyer should still do a title search and a home inspection at the very least. But it does happen.

Most sellers prefer money in their pocket sooner rather than later!

And, lastly, along with buyers getting a mortgage come several related contingencies. Contracts that involve a lender typically include a contingency to make sure that the buyer can actually qualify for a mortgage. (Certainly not a sure thing these days!) There's an appraisal contingency. If the property doesn't appraise for at least the sales price, the deal may be dead. And, depending on the type of financing, there may be other contingencies and/or conditions that make a timely settlement more uncertain.

All in all, if I'm selling, I'll give a little on the price to get a cash buyer!

One of the blog posts I ran across today is very interesting. The bottom line is that mortgage applications have steadily risen in the last six months and that there's some reason for hope in this.

Now, first of all you should know that the vast majority of those applications were to refinance. Very few of them were to purchase a home. However, many of them were people refinancing out of ARMs. To the extent that homeowners are able to do that, we are likely to see fewer foreclosures and short sales going forward.

In my opinion, there is nothing more likely to put a bottom on this market than an end to the flood of foreclosures.

This would suggest that 2008's market might be a little more vigorous than we thought. And I'm certainly seeing more activity on lower priced listings in Fauquier county. That hasn't spread as much to some of the surrounding counties; not yet anyway.

I've got my fingers crossed that these numbers continue through the year. A little good news in the depth of winter is always a welcome thing!

Once again yesterday the melt down in the subprime market made the news. With the stock market down over 200 points, at least in part because of the problems in the subprime market, it's definitely the talk of Wall Street. And it's also getting lots of attention in the real estate community.

If you're not familiar with the background on this let me fill in a little bit of the picture. During the real estate boom of the last few years it seemed like just about anyone could get a mortgage. Now some of these weren't the kind of mortgages anyone in their right mind would have signed up for. But desperate people do desperate things! Many of them were adjustable rate mortgages. Some of them adjusted gradually. Some of them ballooned suddenly after a year or two. If you borrowed 100% of the purchase price of the house and were barely scraping by and now you're payments are suddenly increasing substantially, you may have a problem.

Nationwide, there is clearly a growing number of foreclosures. Despite the stock market performance yesterday, this is nowhere near a panic situation right now. In Virginia for example, in the 4th quarter of 2006, 3.7% of all mortgage loans were in delinquent status. While that's a higher percentage than we've seen in a very long time, the sky is not falling.

Here's what I will be watching and worrying about in our local market. If the number of foreclosures increases dramatically, that will mean lots of additional inventory for sale. In a market that's already drowning in excess inventory, that would definitely be a bad thing.

The other piece of this is that this situation has forced lenders to tighten up the requirements on borrowers. Many lower end borrowers may find themselves unable to qualify to buy a home now. Let me just say, that this is a good thing from a big picture perspective. Many of these people should never have been in a position to buy a home and to do so would subject them, eventually, to terrible financial pressures. But the subprime borrowers were a big enough part of the market that their absence will definitely be felt in the form of lower demand.

These two factors together could mean a rougher 2007 than most economists and housing industry experts had predicted until now. This is a story to keep an eye on!

There's a new company out there called Real Estate Equity Exchange that will help you pull equity out of your home without all the downside of taking on more debt or having to make payments. Or, at least that's what they advertise!

They will give you cash representing up to 15% of the value of your home. In exchange for this cash you give them up to 52.5% of the capital appreciation when you sell your home. In addition, you pay a service charge of $15,000 when you sell the house.

This does not seem like a good deal to me. That seems like potentially a lot of equity to give up for what you get.

This is likely to be most attractive to older owners who would otherwise be looking at a reverse mortgage. The reverse mortgage carries a service charge of $17,000 and current interest rates are somewhere around 6.5%.

The company says one of the reasons that it doesn't sound as attractive is that they are sharing the risk with the homeowner. So, if there's very little appreciation in your home, they make very little money.

While I'm skeptical of this deal it's apparently a big hit in the investment community with people lined up to throw money at the company and invest in these mortgages.

One thing is for sure, the financial options available to consumers are growing increasingly complex and "buyer beware" is definitely a good principle to apply. If you're contemplating any reverse mortgage or utilizing this new offering, make sure you do your homework! AARP has some good information on reverse mortgages. And you'll find some resources on this topic on my web site as well.

If you're unsure, don't hesitate to seek professional guidance from someone who isn't trying to sell you something!

It is a continuing vexation to me that some of the most important people in our communities can't afford to buy housing! I fret over this, but Long & Foster and their affiliated companies has now done something about it!

Health care workers, teachers, firefighters, police and armed forces personnel can now get some help with buying their own home! This new program uses Prosperity Mortgage to give great deals to these deserving servants. In addition to very attractive interest rates, these mortgage programs provide up to 100% financing, and allow the seller to help with up to 4% of closing costs. There is also a $500 credit at closing to help with anything left over. The program can be used to buy a first home or move up to a larger one. For those who have less than stellar credit, this program has help there as well. Most borrowers will qualify for this program!

There are a lot of other associated benefits and I'll be putting the details of the entire program on my web site http://www.JulieEmery.com later today. In the meantime, you can call me directly at 540-270-2742 or call Sal Rotante with Prosperity Mortgage at 703-303-0356 and tell him I sent you!  By the way, Sal is who we used for our mortgage when we bought our home and I can't recommend him highly enough!

If you know anyone working in these service industries, please pass this information along to them.  Too many people think it's simply impossible for them to ever own a home. But it's often not true and this program could make a difference for many of them!

The 30 year mortgage rates have now declined for four straight weeks! They finished this week at right around 6.5% on average, nationally. If you're a buyer, that's great news as housing continues to get more affordable! If you're a seller that's great news as some of those buyers sitting on the sidelines are going to be thinking about locking in these rates before they go back up!

Obviously none of us has a crystal ball, but it wouldn't surprise me to see a slight bump over the next couple of weeks in contracts written. In fact, if interest rates continue to fall, or even just hold steady, that could last more than a couple of weeks!

Keep your fingers crossed for no bad news on the inflation front!