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What Home Buyers Can Learn From a Seller’s Disclosure Statement

Sellers Property Disclosure

Any responsible buyer wants to know everything about the home they’re buying before signing on the dotted line. After all, this is probably the biggest purchase you will ever make, so due diligence is a must. The majority of the real estate agents in Florida are Transactional Agents and do not owe the Buyer a fiduciary duty, An Exclusive Buyer Agent does and will work for the buyer to determine all the information known about the property and advise you on inspections, permit searches, etc. Reviewing the Seller’s Disclosure is the first step in this process.

A Seller’s Disclosure in the State of Florida Is a standard form that is essentially a checklist in which a seller indicates the condition of the different features of a property, any known problems affecting the property, and any pending legal issues. This could include things like knowledge of lead-based paint, water damage, pest damage, past repairs, past insurance claims, any history of property line disputes, etc.

Typically, a seller’s disclosure form is filled out by the seller along with their listing paperwork. When buyer’s agents go into the Multiple Listing Service (MLS) to look up potential properties for their clients, that disclosure statement should be available or can be requested from the listing agent.

I am increasingly running into situations wheretransactional brokerage firms are taking the position that since a Seller’s Disclosure is NOT required by law that are not asking the sellers of their listings to fill one out. The first line of the SPDR provides “Notice to Licensee and Seller”; the less they know, the easier it is to make a “deal”. They are relying on the fact that other transactional agents working with buyers will feel the same and not ask for a Sellers Disclosure.

Although sellers aren’t required to complete this specific SPDR form, a residential seller does have to comply with the rule established in Johnson v. Davis. In that case, the Florida Supreme Court held that “where the seller of a home knows of facts materially affecting the value of the property which are not readily observable and are not known to the buyer, the seller is under a duty to disclose them to the buyer.” These material facts are sometimes referred to as latent defects. In addition, in Rayner vs. Wise Realty Co. of Tallahassee, the First District Court of Appeal provided that this same disclosure requirement applies to residential properties that are being sold as is.

In cases were the listing agent does not provide a Sellers Disclosure I request that the Seller answer all my questions in writing and provide a comprehensive list of questions that encompasses everything asked on the SPDR and more.

A seller’s disclosure form is NOT a substitute for a home inspection. Remember, sellers are required to disclosure only problems they know about. Most homeowners don’t go in their attic very often, and have probably never been up on their roof, and they aren’t required to do so before filling out the disclosure. While this document can provide a lot of valuable information, the home inspection is another layer of protection for a buyer.

The importance of this disclosure statement is just one of the many reasons why it’s critical for buyers and sellers to use an Exclusive Buyer Agent ( EBA) during any real estate transaction. EBAs are up-to-date on the latest laws and regulations and are very experienced with the complex documents and paperwork. They can help walk buyers through the disclosure so they understand all aspects of the home they’re buying and recommend the appropriate home inspections ( WDO, Radon, Leak Testing, Mold, and more) to ensure that any hidden defects are found in advance of the purchase.

Electrical Safety Tips During the Holidays

Xmas tree lights

Decorating your home is one of the most enjoyable parts of the holiday season. Because electricity is involved with so many holiday decorations, it’s important you follow a few simple tips to keep your home and family safe.

Checking your decorations and electrical equipment for damage is one of the most important things you can do to stay safe this holiday season. Before plugging anything in, inspect electrical outlets to ensure they aren’t loose, damaged, or cracked. You should also look for damage to your decorations themselves, like cracked bulbs and frayed electrical cords, and refrain from using decorations with these problems.

Avoid overloading your electrical outlets. If you’re using incandescent light strings to decorate your home or your tree, never plug more than one of these strings into a single outlet. Also, don’t plug multiple high-wattage decorations into one outlet. Either of these decorating missteps can easily overload the outlet and increase your risk for a house fire.

Buy the right decorations. When you’re shopping for your indoor and outdoor decorations, look for items that have been certified by an independent testing laboratory. This means a decoration has been successfully safety-tested.

Lastly, make sure you unplug your electrical decorations whenever you leave your house and when you go to sleep at night. Many electrical fires occur when homeowners are asleep or out of the home, so taking this extra precaution is an important safety tip.

If you want to enjoy a safe holiday season, follow each of these electrical safety tips. Using electrical decorations responsibly can help protect your family from harm while you also transform your home for the holidays.

10 Questions to Ask Your Contractor

Hiring a Contractor

What questions to ask your contractor in advance of hiring them.  Most homeowners have some concerns when it comes to hiring home improvement professionals. Some are afraid of overpaying, some worry that they’re hiring an unqualified professional, and others wonder about the character of the individuals they’re inviting into their homes. Asking these ten questions can help alleviate all of these concerns.

1. How long have you been in the business or working in the industry?

Look for a credible track record and successful work experience.

2. Are you licensed, insured and bonded?

At the very least, make sure your pro is licensed and carries worker’s comp and liability insurance. Bonding is not a universal requirement. Think of bonding as homeowner insurance that protects you in case of an incomplete job.

3. Do you guarantee your work in writing?

While a verbal guarantee is nice, it offers no guarantees that the contractor will actually stand behind his work. Draft a written guarantee that states exactly what is and isn’t covered.

4. Can you provide references?

Ratings and reviews are a great resource, especially when coupled with references from previous customers. Ask your contractor to provide a list of references. Don’t hire pros who can’t offer references. I would also advise researching the Better Business Bureau to see any complaints that may have been filed against the company.

5. Do you pull all the required permits?

Failing to pull the requited permits can cost you in the long run. Have your contractor pull the necessary paperwork and permits to get your job started. Also require that they deliver copies of all closed permits once the job is completed. If your contractor is hesitant, find a new pro.

6. Who will be managing the project?

If your contractor isn’t in charge of your job, insist on meeting the project manager to ensure he measures up to your standards.

7. What is the project timeline and daily work schedule?

Construction scheduling is never perfect. Workers get sick, orders get delayed and weather causes interruptions. But an organized contractor will provide you with a work schedule that clearly outlines a start and end date.

8. Will you need water or bathroom facilities?

Most contractors are self-sufficient enough to bring their own water. But, unless your job is a major remodel that necessitates bringing in a port-a-john, there’s a good chance your workers will need to use your facilities. Dedicate a bathroom (or bathrooms) to your workers before you start your project.

9. Will you need my garage code or keys to my house? Who will have access?

Many homeowners feel uncomfortable handing over the keys to their home. Unless you plan on staying home during the construction, you’re going to need to give your contractor access to your house. Knowing who has the keys to your home will give you peace of mind.  You may feel confident with your ongoing security if you plan on having your locks rekeyed after the project is completed.

10. Will you sign a contract?

All worthwhile contractors will write out a clear contract that defines the work to be performed, as well as the material, costs and completion timeframes associated with the project. Thorough contracts also cover what happens if the project becomes problematic. This is known as a time and materials contract. The contract should also include a termination clause that spells out the circumstances in which both parties are allowed to terminate the contract.

DO NOT PAY IN FULL UNTIL THE ENTIRE PROJECT IS COMPLETED AND YOU ARE SATISFIED WITH THE WORK.

 

Bay Hill Estates

Bay Hill Estates is a West Palm Beach golf community featuring 240 single family homes with Mediterranean-style architecture on acre+ lots.

Bay Hill Estates community includes 240 Mediterranean stop homes on 1 acres lots.  The community offers 24-hr manned-gated entry and a low HOA fee. Bay Hill Estates also offers an 18 hole golf course with a 4,000 sq ft clubhouse which is an optional membership but not required of Bay Hill’s residents.

Bay Hill Estates is located in the heart of West Palm Beach in Palm Beach County, Florida. Enjoy the luscious landscaping and beautiful homes in Bay Hill Estates with easy access to all of Palm Beach County’s finest amenities including airports, downtown areas such as Clematis Street and City Place, entertainment, shopping, boutiques and historical landmarks

The 146 acre, 18 hole PGA National golf course has the incredible status of being voted one of the sixth best golf courses in the world. Membership is not compulsory for residents of Bay Hill Estates. If golf is not your style then you can take long walks along the paths of the flowing canals or lakes.

Nearby Palm Beach also has a lot to offer with high end shopping at the fabulous 1.4 million square foot Palm Beach Gardens Mall where you will find over 160 retailers including Bloomingdales, Nordstrom, and Saks Fifth Avenue to name but a few.  If you want to take a break from all the shopping then Palm Beach also has some of the finest restaurants where you can experience fine cuisine. Palm Beach also houses a true American Castle – Whitehall, which was built by Henry Morrison Flagler and is now known as the Flagler Museum. Known as one of the grandest residences ever built this an absolute must see for everyone visiting Palm Beach.


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Florida Home Buyers Don’t Know What They Don’t Know…

 And the Florida real estate industry likes it that way.

When the disclosure laws, implemented in 2003, changed in 2008 to do away with the “transaction broker” disclosure, the real estate industry must have been celebrating.  It was hard for real estate licensees to tell buyers and sellers that they weren’t being represented.  After July 1, 2008 they didn’t have to anymore.

The presumption in Florida, after July 1, 2003, is that all real estate licensees are “transaction brokers”.  A transaction broker “facilitates” a transaction but doesn’t represent either the buyer or the seller as an agent.  The real estate licensee is a salesperson working with a buyer or seller customer.  In order for a buyer or seller to actually be represented they must enter into a written “single agent” disclosure agreement whereby the real estate licensee agrees to take on the full legal fiduciary duties of an agent and a buyer or seller agrees to have them as their agent.  Then the real estate licensee is an agent and the buyer or seller is a client.

And that is the issue.  Through the presumption of transaction broker, a buyer or seller has no way of knowing what it is or what they might be giving up.  The real estate industry decided to keep buyers and sellers in the dark and “not knowing what they don’t know”.  If there is no written disclosure alerting the buyer or seller to what transaction brokerage really is and that there is a better option, single agency, how are they supposed to know any better.

At least prior to July 1, 2008, a home buyer got a disclosure that told them, ““….parties are giving up their rights to the undivided loyalty of the licensee. This aspect of limited representation allows a licensee to facilitate a real estate transaction by assisting both the buyer and the seller, but a licensee will not work to represent one party to the detriment of the other party when acting as a transaction broker to both parties”.

But not after July 1, 2008.  The requirement that a buyer or seller be given the transaction disclosure was dropped from the law.  So from that time forward buyers and sellers in Florida have no idea that they aren’t being represented unless somehow they had read something about the disclosure going away in an article somewhere back in or around 2008 or a real estate licensee (and the company they are with) actually believes in providing full legal fiduciary duties to a buyer or a seller and presents them with the option of single agency and explaining it’s worth to the buyer or seller.

Fast forward to 2015 and soon to be 2016.  Many of the buyers today weren’t buyers in 2008.  They have no idea that the real estate licensee they are working with isn’t representing them.  They just assume that they are their agent because most real estate licensees continue to act like and talk like an agent and in many cases actually perform duties and services that only an agent can legally provide.  So of course a buyer is going to think that they are working with an agent.

Many other states have a “summary-like” agency disclosure which is handed to a buyer or seller before any personal information is gathered or questions asked alerting the buyer or seller of their options.   The Florida Legislature in 1997 came up with one titled, “Brokerage Relationship Disclosure Act”.   It provided for a Notice of Nonrepresentation disclosure.  This disclosure had to be given “at first contact.”

[Florida Stat., sect. 475.276 (1)] According to the statute, the disclosure is to be given then, “. . . except in situations where a licensee knows that the potential seller or buyer is represented by a single agent or a transaction broker. If first contact between a licensee and a customer occurs during the course of a telephone conversation or any other communication in which the licensee is unable to provide the required notice of nonrepresentation, the licensee shall provide an oral notice and thereafter provide the required notice of nonrepresentation at the time of the first face-to-face contact, execution of a brokerage relationship agreement, or execution of a contractual agreement for purchase and sale, whichever occurs first.” [Florida Stat., sect. 475.276 (2)]

The effect of this disclosure was to let consumers know just where they stood with regard to the licensee they were dealing with. Also it was designed to minimize the occasions when an unintended, unauthorized, and undisclosed dual agency arose because of the behavior of the parties.  Here is a copy of what that disclosure looked like back in 1997.


NOTICE OF NONREPRESENTATION

FLORIDA LAW REQUIRES THAT REAL ESTATE LICENSEES PROVIDE THIS NOTICE AT FIRST CONTACT TO ALL POTENTIAL SELLERS AND BUYERS OF REAL ESTATE.

You are hereby notified that . . . . . . . . . . . . . . . . . (insert name of brokerage firm) and I do not represent you in any capacity. You should not assume that any real estate broker or salesperson represents you unless you agree to engage a real estate licensee in an authorized brokerage relationship, either as a single agent or as a transaction broker. You are advised not to disclose any information you want to be held in confidence until you make a decision on representation.  (Emphasis is mine)  Your signature below acknowledges receipt of this form and does not establish a brokerage relationship.


After a consumer received the notice of non-representation, several choices were presented. If it was mutually agreeable, the licensee and the consumer would enter into a written authorized brokerage relationship of transaction broker or single agent, similar to what we have today.  However, the difference was that the buyer or seller were put on notice not to say or disclose any information that they wanted kept in confidence until they had a chance to explore and accept a more formal relationship.

I suspect that the real estate industry took exception to providing true fiduciary duties that single agency required along with the legal liability that being an actual agent entails.  A local real estate attorney writes in his blog, “Given all the bad acts that have happened in the Florida real estate market in recent years, having an agent with the legal duty to act as a fiduciary can make all the difference in whether or not someone who has been wronged gets compensated for their damage.  It is a huge limitation on the liability of a real estate agent and their broker to be able to act as a transaction broker instead of an agent – fiduciary.  How important that fiduciary duty may be to you will not become clear unless and until you are harmed.  Many buyers and sellers won’t understand the possibility of having a real estate professional act as a fiduciary on their behalf until a catastrophe happens and they are meeting with a Florida real estate lawyer to try and find justice.”

Nearly all real estate companies in Florida operate as transaction brokers now and not as single agents.  Single agency is rare and mostly available only through exclusive buyer agencies in Florida.  Exclusive buyer agencies represent buyers only and never take listings or represent sellers.  They don’t have the conflict of trying to represent buyers and sellers for the in-house transaction.  Buyers Only Florida Realty is an exclusive buyer agency and we only represent buyers and never sellers.  We take on the full legal liability of being an agent as noted above in the attorney’s blog.

The real estate industry really wanted a way to not be an agent at all and thus lobbied for changes passed by the Florida Legislature that took affect July 1, 2003 that brought about the “presumption of transaction brokerage” which we have today.  As noted above, the “transaction brokerage” disclosure continued until July 1, 2008 when it went away.  So here we are in 2015 and soon to be 2016 with buyers and sellers deliberately kept in the dark and misled by the real estate industry.   It would be nice if such a true disclosure were brought back in Florida to be given to both buyers and sellers at first contact, as back in 1997, warning them not to disclosure anything that they feel is confidential and giving them a summary of their options and the consequences of each.  I doubt we will ever see that again.  The real estate industry seems very content with the way things are.

 

Adjustable Rate Mortgages: The Pros and Cons

 

Adjustable rate mortgages are loans with variable interest rates that change according to the market rates, as opposed to fixed rate mortgages, which guarantee a set rate for the entire period of the loan. ARMs may seem like a great idea some years, but in other years, you may wonder what you were thinking when you agreed to the loan.

Many financial experts advise home buyers to seek fixed rate mortgages. The set interest amount makes it easier to calculate monthly payments with no surprises. An adjustable rate mortgage can leave you with unpleasant surprises if the interest rates suddenly soar.

There are some pluses as well as minuses to adjustable rate mortgages. As with any financial decision, learn all you can about the topic and weigh the pros and cons carefully before choosing a loan type.

On the Plus Side…

ARMs may be good for buyers who plan to sell in a few years. If you know your job requires you to move every five years, an ARM may be worth the risk of interest rates rising, depending on the current rate.
Paying off your loan in a short time period may make an ARM better for some homeowners. For those who know they can repay the entire mortgage amount quickly but just need a short-term loan, ARMs may actually save them money.
Some ARMs offer a combination of adjustable and fixed rates. These may offer the best of both worlds, depending on market rates. For example, a mortgage may be fixed for five years, and then adjust annually.
On the Minus Side …

Interest rates may be low now, but that only means they’ll rise later. When interest rates rise, your interest rate rises too. Your monthly payments will increase. This may be a hardship for some people.
Adjustable rate mortgages may be saddled with a prepayment penalty. This means that if you suddenly come into a windfall and wish to pay your entire mortgage loan, you may actually be penalized for paying it off early.
ARMs can be difficult to understand. There are many variables, and you have to carefully read all the fine print to understand the nuances of a particular ARM. Fixed rate mortgages are a lot easier to understand: borrow this, pay that; it never changes.
Adjustable rate mortgages come in and out of fashion, but the truth is that you shouldn’t take out such a loan unless you understand the worst-case scenario and how it may impact your financial health. While they are not for everyone,

ARMs do offer some advantages, and those who can take advantage of these opportunities may find them useful. Talk to your lender about all the ramifications of an adjustable rate mortgage compared with a fixed rate mortgage.

 

Home Buyer Tips and Advice

Buying a house is a difficult process — there are large sums of money involved, the transaction costs and hassle of moving mean that you can’t just buy another house if you don’t like the one you end up with. The best you can do is to educate yourself in all aspects of the house hunt, keep a clear head, and buy a house that best fits your criteria.

There are plenty of articles full of useful tips for first-time homebuyers. I am not going to repeat them. Instead, I will list the lessons I have learned over the past 30 years of working exclusively with buyers that are not often covered.

Think long-term and think re-sale: Are you planning to have kids? Will you be taking care of elderly relatives? You might be planning to live in your first home for only a few years or plan on using it as an income producing property. In that case, who is your target audience when it comes time to sell or rent the house? If you buy a house in a very bad school district or a house with all the bedrooms upstairs when you are ready to sell the house, you will be narrowing the field of potential buyers.

Make a list of items to check when looking at properties: Home-buying is an emotional process. Ideally, you should set aside all your emotions when evaluating a house. Practically, that is impossible. Instead, make a checklist of your must-haves, nice-to-haves or absolutely nots. Then print copies of this checklist or keep it on your tablet. Every time you visit a house, take the checklist along with you; take photographs so you can cross each item off your list. If you fall in love with the house aesthetics but find your checklist shows that the house has none of your must-haves, it will at least make you pause and think.

All the old advice about buying your first home is true. Some examples — have an emergency fund, save for a down payment of 20 percent and closing costs, get your credit into a better shape, and don’t buy more than you can afford. When budgeting for the house, don’t stop with principal, interest, taxes and insurance; add in utilities, cost of commuting and upgrades and replacement costs for aging roof or appliances. Ask the seller for copies of the utility bills and inquire of the utility companies about budget plans. Will the gas budget for your car go up if you are moving further away from the places you frequently visit? Budget all of these expenses and see if you can still afford the house.

Get Pre-approved: Why would you want to waste time looking at houses you can’t afford? Doing the pre-approval process ahead of time is vital. If there is something negative on your credit report, it’s best to find it early in the process, so you have time to correct it.

Ask for the homeowners and condo association documents before you make a decision: If your long- range plan is to rent out the house once you move, then you better insure that there are no rental restrictions that would preclude you from your desired goal. Thoroughly understand the Covenants and Restrictions of any area you are purchasing to ensure that they are in keeping with your lifestyle.

Be sure to read your contract before you sign it: A house is probably the largest purchase you will ever make in your life, so make sure you understand the terms of your contract. If you don’t understand any of the terms, ask your mortgage broker and your real estate agent. Either should be fully knowledgeable to address your contractual questions. I strongly advise that you retain an attorney to handle your closing, review title and loan documents, note title objections, and hold your deposit monies.

Learn about the neighborhood demographics: Do you have kids and are looking at homes without young families? Are the majority of the residents renters and not homeowners? Define the type of neighborhood you want to live and make this one of your top priorities on your checklist.

Look beyond the staging: The psychology of staging does work; staged houses look far better than houses that are still being occupied. When you are considering a house, mentally try to remove the staging. Pay more attention to the layout of the house and the structure itself. Ugly wallpaper and paint can be easily fixed later. Does your furniture fit the scale of the room? Does the house have a functional kitchen?

Indecision: Ever heard of the saying “Curiosity killed the cat”? Well, here’s another one, “Indecision killed the deal.” Not moving on a house fast enough and taking too much time to make a decision on buying the house is common as well. This indecision gives someone else the opportunity to scoop ups that home before you have a chance to make an offer.A multiple offer situation is good for the seller, but not so much for the buyer. In this competitive real estate market with low inventory and high buyer turnout, you need to move quickly in order to get the house that you want.

Only checking online sources for mortgage rates and available homebuyer programs? As much as everyone loves to do everything from their computer or smartphone today, this is one thing that should be done in person or with a phone call. It is always best to call a local mortgage lender and sit down in person with them to talk about the most current rates and programs available. Many of the lenders that you find online are not local and only have teaser rates on their websites. If you choose a mortgage lender that doesn’t have a local presence, a lot can change once they get the paperwork in front of them at the closing table. Insist of using an appraiser that is knowledgeable and does most of their work in area of the property.

Learn as much as you can about real estate, your budget, and your local housing market, but realize that buying a house is all about compromise, and a lot of doubt! No house is PERFECT but if you keep at it the odds are very good that you will find a house that suits your needs and will be a wonderful home for you and your family or your investment goals.

New Water Heater Regulations

 

If you’ve been thinking about replacing your water heater soon, you will want to read up on how the new water heater efficiency standards, effective April 16, 2015, will affect your options.

The U.S. Department of Energy recently mandated sweeping changes in the energy efficiency standards of this water-heating appliance. The new standards call for much higher Energy Factor (EF) ratings on all water heaters manufactured with larger than 55 gallons in capacity.

New water heater regulations mean huge changes in how larger capacity water heaters are manufactured, distributed and installed.

While the new mandates will add up to long term energy savings for all, the initial cost of replacing your old water heater may quickly become significantly more expensive.

For example, the average cost of conventional minimum-efficiency 60-gallon gas and electric water heaters is approximately $675 to $1,500 a unit. While in comparison, the new units manufactured after April 16 will cost anywhere from $1,200 to $2,450 each.

That’s not all. Water heaters manufactured after the new energy efficiency standards go live will require a different heat-pump design and will take up more space than your model now.

This means that if your current water heater is located in close quarters, like a 3 foot x 3 foot water closet or attic, you may be looking at a small home remodel to accommodate the larger units as well.

Water heaters contribute to a significant part of your monthly electric or gas bill. When replacing a water heater you should consider a tankless unit. These space saving units heat water on demand, only when you need it. The tankless technology offers endless hot water – you’ll never take a cold shower again! Because the water is only heated when it is being used, tankless water heaters are a great energy efficient solution for heating the water in your home. You’ll enjoy energy savings, better performance, extended life, fresh water, space savings and more capacity than traditional “tanked” water heaters.

If you are planning on purchasing a home or investment property that will need a new hot water heater, you should figure in these higher cost estimates in addition to the cost of retrofitting the space, if needed.

 

Florida Homestead Exemption Advantages

The obvious advantages to residing in Florida is the weather and no state income taxes.  Another lesser known, but equally as important, advantage is Florida’s homestead laws.

“Homestead” can be a deceptively complex issue in estate and tax planning when individauls finally decide to become Florida residents, including asset protection, property tax savings, and restrictions on the estate plan.

Florida’s asset protection for homesteads is anchored in the state’s constitution (Article X, Section 4). Homestead property owned by a natural person is protected from forced sale under process of any court or judgment lien (except for obligations relating to the real estate itself, such as property taxes, mortgage principal and interest, and contractors’ liens).

The asset protection for homestead includes land and improvements on the land, with an acreage limit of up to 160 contiguous acres outside a municipality, and one-half acre inside a municipality.

Florida also offers two sorts of property tax savings for homestead property: (1) the “$50,000 exemption and (2) the “Save Our Homes” limit on annual property tax increases.

The “$50,000 exemption” is a reduction of up to $50,000 in the assessed value of the homestead property. A homeowner can apply for this exemption by filing a Form DR-501 at the county appraiser’s office.

The $50,000 homestead exemption is helpful as far as it goes, but it doesn’t go very far.  The Save our Homes” advantages for homestead property approved by Florida’s voters as a constitutional amendment in 1992 are much more economically significant. ” Save our Homes” limits annual increases in property assessments to the lesser of 3% or the annual increase in the Consumer Price Index.  Over time, especially when Florida’s real estate market is appreciating, annual “Save Our Homes” advantages can be substantial.

New Fannie Mae Lending Rules Benefit Young Borrowers

The National Association of Realtors reports that under Fannie Mae’s new lending guidelines, which will take effect Dec. 13, securing a mortgage will become easier for some borrowers and more difficult for others.

These new rules will allow buyers to use gifts and grants from nonprofit groups for their minimum 5 percent down payment. Freddie Mac is also considering similar new guidelines, according to spokesman Brad German. Borrowers previously were required to contribute a minimum 5 percent down payment from their own funds, with additional down payment money permitted from a gift.

These new rules are “definitely going to help upgrade buyers and young couples who for whatever reason don’t have enough money and are getting some from their families,” said Edward Ades, the owner of broker Universal Mortgage. The gift rules apply only to single-family principal residences and cover mortgage amounts in excess of 80 percent of the property’s value. The loan balance also has a limit of $729,000 in high-cost areas like New York City and $417,000 in other areas.

At the same time, Fannie Mae is cracking down on debt-to-income ratios, with the maximum ratio for those seeking a conventional mortgage set to drop from 55 percent to 45 percent under the new guidelines. Fannie Mae is also increasing its scrutiny of payment histories on revolving debt, and buyers who have missed a payment will have 5 percent of the total balance added to their ratios.

Under the new rules, borrowers who have gone through foreclosure will be excluded from obtaining a Fannie-backed loan for seven years, an increase from the previous limit of four years.