Charlottesville Real Estate Blog

Guest Post
By Larry Saunders
Loan Officer with Mahone Mortgage, LLC.

On the front page of the Washington Post (February 23, 2008), there was feature article about homeowners losing their equity lines. I brought this issue up during the past week on this blog and now it is making news in a major publication. This type of information is very helpful to know so that homeowners can make informed decisions. In this article there is a quote from a homeowner who says “I thought I was too smart for this to happen to me”. I strive to provide useful information that is important when making decisions about real estate financing and will keep you updated as the home finance market changes. It is also important consumers read and understand what many in our industry consider to be “boilerplate” terminology like “deterioration of the value of the asset or the value of the collateral“.

Do you have a HELOC? If so, what has been your experience with your HELOC in light of what many lenders are considering a declining market?

Helping you make smart decisions about your Charlottesville home financing options,

Larry Saunders
Mahone Mortgage, LLC.
685 Berkmar Court
Charlottesville, VA 22901

If you have a specific question about home equity lines of credit, you may leave a question here in the easy to use comment box or you may email Larry direct at larrys@mindspring.com.

Larry’s website is : www.larrysloans.com

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Guest Post
By Larry Saunders
Loan Officer with Mahone Mortgage, LLC.

Variety of Uses for HELOC’s

For many reasons, the Home Equity Line of Credit (HELOC for short) has been a very popular method of borrowing money over the past several years. Banks made it very easy for homeowners to set up this type of home loan over and above their existing first trust loan in any amount from $10,000 on up to 100% of the market value of the a home. This type of loan can generally be arranged quickly with little or no closing costs and the interest rate is lower than many credit cards and car loans. People also like that the interest on a HELOC is tax deductible (well, for most people, anyway).

HELOC’s Provide Ready Access to Cash

The interest rate on a HELOC varies over the life of the loan. Whenever the Prime Rate goes up or down, the interest rate on this type of home loan also goes up or down. In return for taking on the risk of a variable interest rate, a homeowner using a HELOC can withdraw any portion of the approved loan amount for any purpose and pay back the borrowed money whenever they want and then do it time and again. This enables a borrower to have ready access to plenty of money for whatever they want, whenever they want to use it but not have to pay interest on it when they don’t need it.

Read the Fine Print!

Most borrowers who have set up a HELOC assume they have access to the full amount of the Line of Credit for which they were approved. However, it would be a good idea to check the fine print of your loan documents because in the fine print for a HELOC, the bank has the right to NOT provide additional funds if, in the bank’s opinion, the market value of the property secured by the loan has decreased in value. This is exactly what is happening in some parts of the country. The nearby Washington Metropolitan Area is currently defined by Fannie Mae and Freddie Mac as being in a “declining market”. Some banks in these ‘declining’ areas are refusing to advance funds to some borrowers even when the borrower has not withdrawn the full amount of their “approved” loan amount.

Smart Access To Your Money Tip

Fortunately, the Charlottesville real estate market is not defined as a declining market. However, if having access to all the funds in your approved HELOC is important, you might want to consider drawing on those funds now just to be on the safe side. You’ll be paying interest on the borrowed funds, but that will be offset by the peace of mind knowing you have access to the amount you were expecting.

Helping you make smart decisions about your Charlottesville home financing options,

Larry Saunders
Mahone Mortgage, LLC.
685 Berkmar Court
Charlottesville, VA 22901

If you have a specific question about home equity lines of credit, you may leave a question here in the easy to use comment box or you may email Larry direct at larrys@mindspring.com.

Larry’s website is : www.larrysloans.com

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Could the Albemarle County Budget Shortfall Mean Higher Property Taxes?

As you know, the 2008 Albemarle County property tax assessments are out and overall, the word from the county’s assessor’s office is that residential property values in Albemarle County dropped slightly by 2.5 percent, and in rural areas property values dropped 0.5 percent as a result of the recent reassessment. On January 29th, NBC 29 News quoted Albemarle County tax assessor Bruce Woodzell in their report. Woodzell stated “We saw a trend where land is still holding its value and the reduction we saw in the residential market was coming more from what we felt like was devoted to the buildings.”

Albemarle County Depends on New Construction Growth for Revenue

Because new residential construction lagged in the Albemarle/Charlottesville real estate market in 2007, a county revenue shortfall is now a reality. For many county governments, the easiest way to make up the shortfall is to raise property taxes to sustain county services and school budgets. Local school officials are now scrambling to makeup an estimated $2 million budget shortfall. Stay tuned to hear how this all plays out.

Charlottesville Assessed Property Values Increased Slightly

In Charlottesville, the average assessment of existing houses increased by 4.2 percent. Obviously this is a significant decrease in Charlottesville property values when compared with the 16.2 percent increase the market experienced in 2006.

If you happen to be one of the Charlottesville homeowners who saw your property value increase dramatically and feel it is not warranted, leave a comment. There is an appeals process that may offer you a remedy.

Stay tuned for future property tax updates,

Brian

P.S. Subscribe today to our Good Neighbor Newsletter. Each issue is filled with fun facts and common sense information you can use in your daily life here in Cville.

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