Category Archives: Buying

How Federal Interest Rates Affect You

With interest rates at a crazy low, it is a great time to look at purchasing, refinancing or moving up-downsizing.  30 year fixed rates are 3.79% from what I read today at Noon (Bankrate.com). There is something significant happening today that may affect these ridiculous interest rates.

The Federal Reserve controls the open market operations, the discount rate, and reserve requirements. The Board of Governors of the Federal Reserve System is responsible for the discount rate and reserve requirements, and the Federal Open Market Committee (FOMC) is responsible for open market operations. Using these three, the Federal Reserve influences the demand for, and supply of, balances that depository institutions hold at Federal Reserve Banks and in this way alters the federal funds rate. The federal funds rate is the interest rate at which depository institutions lend balances at the Federal Reserve to other depository institutions overnight.

Changes in the federal funds rate trigger a chain of events that affect other short-term interest rates, foreign exchange rates, long-term interest rates, the amount of money and credit, and, ultimately, a range of economic variables, including employment, output, and prices of goods and services.

The FOMC meets eight times per year, one of which is happening today. All indications are that interest rates will increase because of the current meeting. That makes it a valuable time to get approved, find a home, lock in, and enjoy low interest rates for the next 30 years, or until you decide to sell at 12% market increase annually, if numbers continue at the current rate (MetroTex).

Call me soon to discuss the current market, strategies and just to say hi. I look forward to working with you and helping you find your next home or investment.  

 

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DFW Area home sales and prices hit records!

Home prices in the DFW area are at another record-setting high in April 2017. Median sales prices are up 12% from a year ago, according to MetroTex Association of Realtors (MetroTex), North Texas Real Estate Information Systems (NTREIS)! 12% higher across the metroplex is what was documented in the record books, but were even higher in some neighborhoods according to the Real Estate Center at Texas A&M University and the NTREIS. Not only are the prices soaring, which is not projected to plateau off in most studies out there, real estate agents closed on 5% more homes in April 2017 than they did a year ago in April, 2016.

More than 30,000 North Texas properties changed ownership in the first quarter of this year (MetroTex). There is a tight supply with homes selling in hours sometimes, especially in those under $400,000 (NTREIS). On average, it took less than 40 days to sell a house in the area, slightly less time on the market than last April, and even less in markets under $200,000 and in certain locations. The current market supply consists of a 2.5-month supply of houses listed for sale with real estate agents, which is less than half of a normal market (NTREIS). I have sold two listings this year that were in contract within 24 hours of going onto the market.

So, do you wait for the market to ‘calm down’? That is a question I get a lot. It is never a bad time to buy in my opinion. If you have property, then you have profits/ proceeds out of that at a high market while taking it and applying it to what you want. If you do not currently own, there are some excellent programs out there in attempts to convert lessors into home owners. Those are most likely short lived in my opinion, so, now is an appropriate time to jump in there. With some down payment assistance programs, it is cheaper to buy than to rent.

Further, interest rates continue to remain consistently low and even have dropped when projected they were to rise. Interest rates are so low that it makes sense to finance property now. So, with that in mind, call me or text me with any questions. I will help you get started, introduce you to some great lenders in the area, and we can find your next home or investment.

Does Home Loan Lingo Have You Confused? 

Are you thinking of purchasing property for your personal property, investment property or for your college kid(s), but feeling overwhelmed by the loan lingo and acronyms that seem like another language?  Whether you are a real estate warrior buying and selling for decades or whether this is your first -time real estate experience, or more commonly, been several years since home ownership, it is rarely easy to determine which loan program(s) are best for you, i.e.,  conventional loan, an FHA loan or any of the other loan types available.

Mortgage lending officers will be your main resource for this, so it is ultimately important to find someone you trust and who is experienced in your market. They will be familiar with the ebbs and flows of the different types of mortgage programs available, and they will also be able to provide an informed and educated perspective on your current financial situation helping to match you to the best mortgage loan options available.

I am not a lender. I am a Realtor and I cannot give counsel on loans in particular, nor do I have anything to do with originating or getting them approved. I work with a handful of excellent lenders, and I love them all. I can, however, provide some basic information that anyone can gather from diligent research, and I can put it together hopefully in a meaningful and useful series of words for your benefit.

Government agencies such as the Federal Housing Administration (FHA), the Farmers Home Administration (FmHA), U.S. Department of Agriculture, and the Department of Veterans Affairs (VA) can insure or guarantee loans.  The FHA is a part of the Department of Housing and Urban Development (HUD) and insures residential mortgage loans made by private lenders.  The FmHA provides financing to farmers and other qualified borrowers who may have trouble getting loans.  VA loans are for veterans or members of the military and can have a lower down payment.

The most common government insured loan I see is through the FHA. I hear a lot of people think that these are for first-time homebuyers and I hear a lot of untrue conjecture from both professional and from lay people regarding ever-changing FHA rules.  A  Basic Home Mortgage Loan 203(b) is designed to provide mortgage insurance for a person to purchase or refinance a principal residence. The mortgage loan is funded by a lending institution, such as a mortgage company, bank, savings and loan association and the mortgage is insured by HUD.

The eligibility requirements are much different than what most people quote or even cite in written materials. The following are the eligibility requirements as published by FHA on their website:

  • The borrower must meet standard FHA credit qualifications.
  • The borrower is eligible for approximately 96.5% financing. The borrower is able to finance the upfront mortgage insurance premium into the mortgage. The borrower will also be responsible for paying an annual premium.
  • Eligible properties are one-to-four unit structures.

Now, each property must be approved and meet certain criteria for the FHA to insure them, meaning that the FHA requires a certain type of inspection/ appraisal. This disqualifies a lot of homes and particularly those being sold ‘as-is’ from FHA buyers. That meant a few years ago that FHA buyers were not eligible to even bid on certain properties. That has changed somewhat through the streamlining of an FHA program that is designed to help buyers rehab certain properties while being insured by the FHA.

The FHA Section 203(k) program is insurance that enables homebuyers to finance both the purchase of a house and the cost of its rehabilitation through a single mortgage. Section 203(k) fills a unique and important need for homebuyers. When buying a house that needs repair or modernization, homebuyers usually have to follow a complicated and costly process. The traditional interim acquisition and improvement loans often have relatively high interest rates, short repayment terms and a balloon payment. However, FHA Section 203(k) offers a solution that helps both borrowers and lenders, insuring a single, long term, fixed or adjustable rate loan that covers both the purchase and rehab of a property. Section 203(k) insured loans save borrowers time and money. They also protect the lender by allowing them to have the loan insured even before the condition and value of the property may offer adequate security according to government guidelines.

Section 203(k) insures mortgages covering the purchase or refinancing and rehabilitation of a home that is at least a year old. A portion of the loan proceeds is used to pay the seller to pay off the existing mortgage, and the remaining funds are placed in an escrow account and released as rehabilitation is completed. The cost of the rehabilitation must be at least $5,000, but the total value of the property must still fall within the FHA mortgage limit for the area. The value of the property is determined by either (1) the value of the property before rehabilitation plus the cost of rehabilitation, or (2) 110 percent of the appraised value of the property after rehabilitation, whichever is less.

The extent of the rehabilitation covered by Section 203(k) insurance may range from relatively minor (though exceeding $5000 in cost) to virtual reconstruction: a home that has been demolished or will be razed as part of rehabilitation is eligible, for example, provided that the existing foundation system remains in place. Section 203(k) insured loans can finance the rehabilitation of the residential portion of a property that also has non-residential uses. The types of improvements that borrowers may make using Section 203(k) financing include:

  • structural alterations and reconstruction
  • modernization and improvements to the home’s function
  • elimination of health and safety hazards
  • changes that improve appearance and eliminate obsolescence
  • reconditioning or replacing plumbing; installing a well and/or septic system
  • adding or replacing roofing, gutters, and downspouts
  • adding or replacing floors and/or floor treatments
  • major landscape work and site improvements
  • enhancing accessibility for a disabled person
  • making energy conservation improvements

These are not easy deals to put together and I highly recommend utilizing an experience and informed team. If you have the money to put down, you may want to consider a conventional loan. At one point in the United States, conventional loans were the only mortgage loans available and they were all issued by local lenders such as banks, savings and loans, and credit unions. These private lenders kept and serviced these loans in their own portfolio until they were either paid in full or foreclosed on – kind of like the movie, It’s a Wonderful Life. A conventional mortgage is a loan that is not guaranteed or insured by any government agency.  It is typically fixed in its terms and rate.

An advantage to selecting an FHA over Conventional is that easier credit standards can be met to obtain financing. Typically, FHA requires a low down payment amount, lower credit scores are allowed, less elapsed time is needed for major credit problems (foreclosures and bankruptcies) and, if needed, you can use a non-occupant co-borrower (who is a relative) to help qualify for the loan using blended ratios. Blended ratios are debt-to-income ratios that equally blend the borrower’s and non-occupant co-borrower’s income and monthly payments to qualify for the loan. I am writing next week about Kiddie Condo Loans through the FHA. 

Conventional mortgages are typically a 30-year fixed rate loan.  That means the loan has a fixed interest rate for the 30 year term of the mortgage.  Conventional mortgages also typically require at least a 20% down payment.  For example, if a house costs $200,000, the lender will loan up to 80% of the appraised value.  So, $160,000 is financed, and the borrower pays $40,000 cash.

The major advantages to conventional loans is that you have more autonomy toward the property you want to purchase and your payments will be lower if you put more down. The most obvious advantage is that the Private Mortgage Insurance charged to conventional loans over 80% of the appraised value will be dropped from your payment as soon as your principal is paid down to 78% or less of the appraised value of the loan. FHA Mortgage Insurance is consistent and does not ever adjust from your payment.

There are too many conventional loan programs to go into here, but call me to help you shop and find the right mortgage lender or ask around to your friends and family and find the person/ institution you trust. Please give me a call to talk a little about what I know about these programs, your choices in lenders, and in properties available that fall into each of these categories. Remember that I am your friend and expert in real estate, and I love referrals too! Feel free to share my newsletter with your friends and family.  Call me any time – 512-507-1498 or email me at mistimeyers@yahoo.com

http://portal.hud.gov/hudportal/HUD?src=/buying/loans
http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/203k/203k–df
http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh
http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/ins/sfh203b
http://www.mortgage101.com/article/fha-kiddie-condo-loans-first-homes-young-adults

Credit Score 101

First of all, lenders want to make mortgages, but they also are required to minimize their own risk. This is typically done by using credit scores as a measure.

Credit scores are compiled separately by three consumer reporting agencies — EquifaxExperian, and Trans Union. These credit reporting bureaus calculate scores differently, and base their scores on information that may differ from other bureaus.

Equifax Beacon 5.0 Facta: scores range from 334 to 818.

Experian Fair Isaac V2: scores range from 320 to 844.

Trans Union FICO Risk score Classic 04: scores range from 309 to 839.

A credit score is a unit of measure in the form of a number that reflects the information in the credit report, timely payment of bills, how much is owed, payoffs, and derogatory information such as liens. It also includes inquiries into accounts from lenders, landlords, and employers.

So, when you apply for a home loan, your application includes giving your lender permission to “pull your credit” and base the decision to lend to you and the rate of interest on the information contained in your credit scores. The higher the score, typically the better terms you’ll receive from the lender.

Once credit scores are reviewed by the mortgage lender, a computer-generated report of the findings is mailed, but it most likely will not include a copy of the ntire credit report. It should include key factors that adversely affected scores. Some examples might include:

  • Too many inquiries in the last 12 months
  • Time since most recent account opening is too short
  • Proportion of loan balances to loan amounts is too high
  • Too many accounts with balances
  • Amount owed on revolving accounts is too high

What can you do if you’re declined for the loan, or your lender wants to charge higher interest than you were expecting? Talk to your lender and ask for help repairing or correcting your scores. For example, you may have innocently done something that resulted in a negative score, such as closing a line of credit. Or, you may not have realized that a late payment would bring your score down as much as it has. The lender should tell you what you need to do.

Under federal law, individuals have the right to obtain a free credit report from each of the national consumer credit reporting agencies once a year. There are several sites to facility this including AnnualCreditReport.com or FreeCreditReport.com.

If there is a discrepancy or an account that shows the wrong balance, simply show work through the lender and produce things like a canceled check, release of lien or other proof that the credit report is wrong. This will need to occur with each of the three main reporting agencies.

While there is no real hard rule on exactly what scores will be approved, there are some formulas and algorithms that are industry standard. Typically speaking, 680 and above are best credit scores to work with. If you are willing to do the work and pay a little extra, you can probably get through on a 580, but that is not set in stone.  FHA approval starts at about  600, depending on the program, some say 580, but to be a sure bet on getting approved at a desirable rate, you will need a 620 or higher typically speaking.  Again, talk to your lender as these are just benchmarks and no guarantees as I am NOT a lender but a licensed Realtor.

Call me for a referral if you need a good mortgage lender, and do what he/she tells you to do to get the best rate, including paying more than the minimums, paying on time, and making sure that your debt to income is well within your ability to repay all your loans. Getting prequalified is the first step in this crazy and competitive market! This is a first step even if you need to sell a home then buy another one. It is imperative to have your ducks in a row when making an offer. I am very creative in this seller’s market both in helping buyers with solutions outside of the box as well as strategic planning and marketing for both buyers and sellers. I hope to hear from you! 512-507-1498…

Hottest Housing Markets for Early 2016

The overall national housing market in January mimicked the traditional seasonal trend of fewer homes on the market and slower sales, however the market is projected to increase into a possible record-breaking Spring season. According to Realtor.com, initial results from January documents positive growth at statistically significant higher numbers than January 2015. This should result in the positive growth in the residential real estate market in 2016, which is the prediction by almost all experts in the field.

Realtor.com noted in their report that the median days in inventory is now 100 days, which calculates to 6% longer to sell in January than in December, 4% faster than January 2015.

Here are the 20 hottest housing markets in January 2016, according to Realtor.com:

  1. San Francisco, California
  2. San Jose, California
  3. Dallas, Texas
  4. Vallejo, California
  5. San Diego, California
  6. Sacramento, California
  7. Nashville, Tennessee
  8. Stockton, California
  9. Denver, Colorado
  10. Los Angeles, California
  11. Santa Rosa, California
  12. Oxnard, California
  13. Palm Bay, Florida
  14. Yuba City, California
  15. Modesto, California
  16. Detroit, Michigan
  17. Midland, Texas
  18. Santa Cruz, California
  19. Tampa, Florida
  20. Fort Wayne, Indiana

And here’s Zillow’s top 10 of the hottest housing markets in 2016.

  1. Denver, Colorado
  2. Seattle, Washington
  3. Dallas-Fort Worth, Texas
  4. Richmond, Virginia
  5. Boise, Idaho
  6. Ogden, Utah
  7. Salt Lake City, Utah
  8. Omaha, Nebraska
  9. Sacramento, California
  10. Portland, Oregon

 

Austin vs DFW

I work in two great real estate markets. I get asked all the time what are the differences. They are apples and oranges in my opinion. Here is the best breakdown I can give you. I did some of my Misti calculations according to the MLS numbers I have access to, and the following is what I see for sellers and buyers. I started with what a regular person who is approved for an FHA no down payment bond programs of about $130,000. Now, let’s go find a house.

There are 4722 properties available in the DFW market on the MLS at 1:30 this afternoon under $130,000. Here is what I can sell you in Arlington for $130,000 in the DFW market. Or take a look at my listing in Plano.

5611 Sarasota Drive, Arlington , TX 76017

SqFt: -1564

Beds:-3

Bath:-2

$83.12/ sq ft.

MUST SEE!! BEAUTIFUL, WELL-MAINTAINED HOME IN QUIET NEIGHBORHOOD. HIGHLY SOUGHT AFTER ARLINGTON SCHOOLS–MARTIN, MOORE, AND BOLES. LAMINATE FLOORING AND TILE THROUGHOUT–NO CARPET. UPDATED FIXTURES IN BOTH BATHROOMS. ROOMY KITCHEN WITH BREAKFAST BAR. COZY DINING ROOM THAT LOOKS OUT OVER THE BACKYARD. LARGE FAMILY ROOM WITH BUILT-IN LIGHTED BOOKSHELF. FULLY FENCED LARGE PRIVATE BACKYARD WITH PLENTY OF ROOM FOR THE KIDS OR GRAND-KIDS TO PLAY. This will go FHA financing.

DFW home

Now, if you are a buyer in Austin, we have 226 properties available in the ATX market on the MLS at 1:30 this afternoon under $130,000. In areas surrounding Austin, this is what you can get. There is nothing in the city that is in this price range. There was one home that would go FHA in Georgetown, so I just selected the best one I see on the market.

6002 Turnstone CT

SqFt: 880

Beds:  3

Bath:  1

$136.6 0/ sq ft.

ABSOLUTELY NO CLOSING BEFORE AUGUST 1, 2015 – Amazing opportunity-fixer upper sold “AS-IS “with all faults” – NO DEDUCTIONS OR REPAIRS! — 3/1 w/converted garage. Price reflects the need for a complete makeover. Great margin for the investor, rehabber, flipper, owner occupant willing to take on a project. This will not qualify for FHA financing.

ATX Home

The following numbers are my research findings from the Austin Board of Realtors MLS and from the Metrotex Board of Realtors MLS at about 1:30 this afternoon (7/10/15).

  • There are approximately 29,000 listings in the DFW MLS residential market at the current time.
  • There are approximately 11,000 listings in the ATX MLS residential market at the current time.
  • 4,722 properties available in the DFW market on the MLS at 1:30 this afternoon under $130,000.
  • 226 properties available in the ATX market on the MLS at 1:30 this afternoon under $130,000.
  • There are 954 homes between $400,000 – $500,000 in ATX at the same time.
  • There are 2,397 homes between $400,000 -$500,000 in the DFW at the same time.
  • There are 1,591 homes between $500,000 and $1,000,000 in the DFW at the same time.
  • There are 3,777 homes between $500,000 and $1,000,000 in the ATX at the same time.
  • There are 1,461 homes between $1,000,000 and $5,000,000 in the DFW area at the same time.
  • There are 674 homes between $1,000,000 and $5,000,00 in the ATX area at the same time.
  • There is one home in the ATX MLS for more than $20,000,000.
  • There are four homes in the DFW MLS for more than $20,000,000.

ATX chart DFW chart

 

 

Dallas/Fort Worth’s Booming Market

It is hard to name the metroplex. We call it DFW or Dallas Fort Worth. However, there is a lot more to the metroplex. South like Arlington, Grand Prairie and now a booming Mansfield.  These areas are hot, but the real growth is north! Plano, Frisco and Allen are on fire! Homes last less than 24 hours in those areas with multiple full-price offers. That is actually the case all over this big ol town.

It is a sellers market for sure. It is hard to find a home, and when one is available that a buyer likes, then the competition really begins.  For listings, some cannot even get the signs in the yard before the offers start rolling in – sight unseen at many times. This makes the hussle hard for buyers but easy for sellers. The reason? 4,000 people are moving here each week. That’s crazy!  According to the Dallas Morning News, Dallas-Fort Worth added more new residents than almost anywhere else in the U.S. in the latest population estimates.

The following chart is from the Dallas Morning News (with permission) and depicts what is going on up here.

I have clients ask me if the market is going to correct. I can only say that I cannot see it going anywhere here in this boom economy. Businesses are moving to Texas for the amazing tax breaks. People are moving here to work for those businesses and also because Texas has no income tax. I had several clients who wanted to purchase property just before the end of the year for that purpose alone. I do not think that the prices or housing stock are going to correct any time soon, so if you want to buy, do NOT wait a few months for things to calm down. The stats show that will not happen. If you buy now, and things continue as they are, you will have equity in your home in just a few minutes, pardon me months!

I am experienced and know this area very well – all over it! I am back home here in DFW most of the time, though I still work in the Austin market, mostly lake properties and student housing. I love helping people, so call, text or email me. I can help make this process fun and reduce the stress…

Condos and Townhomes for sale in the ATX!

I am getting a lot of chatter about home sales, record prices, etc. The interesting thing is that many of the stats that are out there in most of the news rags are not specifically about the condo and townhome stock in this crazy hot market. The number of listings are up for condos/ townhomes, so there is stock. The median price is higher than every historically in the downtown market. I have heard some conjecture about overbuilding and price correction in this area. The numbers do NOT tell that story. They tell a story of a great opportunity to buy a chic downtown condo with the data showing historical median price increases that have shown an impressive growth curve for three years in a row. If you look at how many condos/ townhomes have sold, you will see that not even half way through this year, we are looking at numbers indicating selling more in this market than ever before. And look at the median prices.

Matrix – Click here to view this chart that indicates the median sales prices over the past several years indicating a dramatic increase.

Historic Sales x Price Range – Click here to look at the median sales prices and how many condos and townhomes were sold during each month of each year.

Austin Student Housing

Hey parents, are your kiddos flying the nest and heading off to Austin to go to school? I have lived in Austin for over 20 years and am the proud mother of three children, the oldest of whom just graduated from college. Living expenses have been most significant in my college experience and many would agree! I am a licensed real estate professional in the Austin, Texas area working in the JB Goodwin REALTOR Westlake office – in an energetic, high-producing, award-winning office. If you have kids moving to Austin and need a place to lease, let me help you find the right property for their needs. The Austin real estate market is unbelievably dynamic (according to the City Demographer there are an estimated 110 people a day moving to Austin!).  I live in the West-central area of Austin, just a few blocks from the campus area, and know the area well.

If you are in a position, I highly recommend you look into purchasing a condo or other property near the university or downtown area. With the current market in Austin setting sales and price records for the past three years, now is a good time to buy. By offsetting some of the property costs by renting rooms to roommates and then adding in the property equity acceleration, purchasing is a great alternative to leasing. Contact me for more information and to discuss how I can help you with your property needs!  I do keep up with the current stock and can help you through a very complicated market down here! Best of luck to you all!

May Leasing Statistics

20141021_141438_HDR_resized

The Austin leasing market is still VERY tight. Even with an increase in inventory, we still see MULTIPLE OFFERS on solid lease properties. Apartments are 95% occupancy city wide —– in popular areas they are at 97% and some have waiting lists.  So, if you are your college student is moving to Austin and plan to lease, start looking NOW! The markets changes on an hourly basis in some areas!

Investors, it is a good time to buy MORE rental property, even though supply is up.  US Census figures show from July 2013 to July 2014 the number of people moving to the Austin area was 157 new people per day and City of Austin Demographers estimate 110 per day. Either way, there are a lot of people moving here EVERYDAY! Opportunities are abundant…Angelos Angelou (angeloueconomics.com/) predicts the Austin area will add 70,000 ate a create conducive investment market! The following table gives a graphic snapshot of the hot Austin leasing market…from both sides:

Total Lease Properties Median Price per Single Family Median Price per Total Total Home
Home, Condo, TH & Dpx Price Foot Homes for Lease Price Foot Leases Leases
1-May 1,281 2014 1.29 675 2014 1.08 Total Houses
2014 12 mo 12 mo 3,757 2,404
$1,395 $1,595 2014 2014
4 mo 4 mo
1-May 1,563 4 mo 1.44 687 4 mo 1.18 Total Houses
2015 $1,500 $1,600 3,823 2,385
2015 2015
4 mo 3 mo
% ^ 22% 7.50% 2% Level 2% Level
1 year

Sources:

Texas Real Estte Center                http://recenter.tamu.edu/Data/hs/hs140b.htm

Multiple Listing Service

REALTOR.com          www.reltor.org/

MetroStudy Austin  www.metrostudy.com/view_market.php?id=10

MPF Research Greg Willett   www.realpage.com/market-research/mpf/

Capital Market Research  http://cmraustin.com/

JB Goodwin REALTORS®