Going, Going, Gone - The Key to Peace of Mind before Bidding on Properties
By Paige Tepping
RISMEDIA, June 16, 2009-Buying a home is one of the most significant decisions, as well as one of the biggest investments, a home buyer will ever make. With home prices down around the country, mortgage rates at record-level lows, an $8,000 tax credit for first-time home buyers and a surge in home auctions, buyers must be more educated than ever in going through the home-buying process. Home buyers are looking for peace of mind right now, and Pillar To Post’s home inspections give prospective buyers just that.
According to the Associated Press, home auctions have surged 47% since 2003, which opens the door to homeowners interested in buying a home at a bargain price.
“There is a huge inventory of homes on the market right now, which is great for buyers, but it should still be ‘buyer beware,’” says Trevor Welby-Solomon, Pillar To Post’s vice president, Technical Training, Support and Development. Home buyers must be cautious, because homes sold at auction are sold ‘as is;’ therefore, professional home inspections are a crucial element in the bidding process.
With the economic climate we are experiencing today, it is easy for buyers to say that money is tight and they don’t want to spend the $350-$450 it costs to get a home inspection, but Welby-Solomon says the exact opposite is true.
“Since credit is tight and home values have dropped, it is almost impossible to go back to the lender or bank and further define a line of credit to fix items within the home once you move in,” he says. Home inspections focus on the structural element or systems of the home and look closely at items regarding the health and safety of the occupants. “In addition to checking the major structural items within the home, home inspections also cover more common elements, such as the condition of the roof covering, leaks in the basement and the major mechanical systems (heating, cooling, electrical and plumbing).
“Home inspections take away the emotional aspect of the transaction as well as provide prospective buyers with an objective, third-party opinion of the building,” says Welby-Solomon, and are especially important for buyers looking to purchase a home through an auction.
“Home inspections are used to better educate buyers about their potential purchase and whether the price of the home is actually the final cost,” he says. While it may be appealing for buyers to bid low on a home, it is a good idea to have a sense of what your final expenditure will be once the home is yours.
“Since joining Pillar To Post in 1994, home buyers and sellers’ attitudes toward home inspections have changed completely,” says Welby-Solomon. “There is a much greater awareness of the value of a home inspection, and a lot of this has come about as younger buyers are coming into the marketplace.” As younger buyers are more research- and information-oriented, they are looking for more value and want to be more educated and informed in making decisions, he says.
While there are numerous good deals to be found in today’s market, home inspections give buyers peace of mind before actually buying the property.
“Don’t be afraid to ask if you may bring a third party with you to do a walk-through of the home before the auction starts,” says Welby-Solomon. “Home inspections allow prospective buyers to not walk blindly into a home auction and end up with a money trap that you have to keep throwing money into after purchasing.”
For more information, please visit www.pillartopost.com.
Monday, June 15, 2009
Friday, June 5, 2009
We've Moved!
We've Moved!
Texas Sold Team Realty, LLC has moved to a new office in Keller, Texas. Come by and visit us! Keep checking in for our GRAND OPENING RIBBON CUTTING CEREMONY in July.
New Address:
424 Keller Parkway
Keller, Texas 76248
Texas Sold Team Realty, LLC has moved to a new office in Keller, Texas. Come by and visit us! Keep checking in for our GRAND OPENING RIBBON CUTTING CEREMONY in July.
New Address:
424 Keller Parkway
Keller, Texas 76248
Can You Get a Loan Today?
Can You Get a Loan Today?
Changes in the real estate and mortgage markets have prompted many, including many in the media, to wonder, "Can you get a loan today?" For an answer to this important question, YOU Magazine turned to Barry Habib, an expert in the mortgage-backed securities market. Chairman of Mortgage Success Source and founder of Mortgage Market Guide, Mr. Habib has managed a hedge fund, authored a stock advisory newsletter, owned an insurance agency, and has been an avid real estate investor for many years.
Habib says that, yes, you can get a mortgage in today's market, but you have to understand that lenders have returned to a pre-2000 mindset – a kind of "common-sense lending" that seeks long-term success versus short-term profits. There's plenty of money available, says Habib, but your mortgage must make sense in today's terms, not the looser standards permitted by lenders in 2000 and 2001.
How Did We Get Here?
In 2000 and 2001, real estate was hot – make that white hot. According to the S&P/Case-Shiller Home Price Composite 10 Index, an index that follows home prices, values increased 21.5% from the years 1990-1999. During the first two years of this decade alone, home prices increased 23.6% for the same index. This resulted in a period of wildly loose lending guidelines that would ultimately fuel the subprime mortgage collapse in 2008.
In retrospect, it's easy to see, and even understand, the mistakes that were made during this unusual period of growth. Rapidly escalating home prices not only eased economic and personal financial woes, they invited opportunity and risk whose rewards, while hard to resist, couldn't possibly be sustained at such a high level. Nonetheless, increasing equity created flexibility that benefitted buyers and sellers alike – as long as property values continued to ascend.
During this time, borrowers with no jobs, no down payments, and poor credit histories could easily obtain financing. A host of exotic mortgage products flooded the market. And even if a borrower got into trouble, there was a multitude of options to help him or her climb out of the hole, including refinancing or even selling the property. A lot of people made a lot of money during this time.
But, as the real estate market began to turn and the economy began to suffer, home values slowed and then ground to a halt, and the true risk in the market was exposed. No longer supported by skyrocketing home values, borrowers had fewer options, lending guidelines tightened, adjustable rates adjusted, resulting in a crash in the market that is only now just beginning to turn.
What Does This Mean to Borrowers Today?
Simply put, home lending has returned to what insiders call a "full-doc world." This means lenders need proof, documented evidence that a borrower is creditworthy and likely to repay the loan. This creditworthiness is based on the four tenets of lending: the borrower's ability to pay, willingness to pay, equity in the transaction, and the property itself.
Ability to Pay
This is the documentation portion of the equation. In determining one's ability to repay a loan, it is now common for a lender to ask for recent paystubs, W-2s, and possibly tax returns in the case of a salaried employee. For self-employed borrowers and those earning commissions, tax returns for the two most recent years and a profit and loss statement for the current calendar year will likely be required. While certain exceptions may be granted, potential borrowers can further increase their chances of securing a mortgage by keeping their debt-to-income level below 45%.
Willingness to Pay
Repercussions of the credit crisis have made FICO scores more important than ever to lenders. In order to obtain the best interest rate and have a broader selection of loan programs from which to choose, potential borrowers should strive to keep their FICO score above 720.
Borrowers whose scores fall below 720 where the loan will be sold to Fannie Mae and Freddie Mac can expect risk-based pricing, which could result in either higher costs or higher rates. So, while it is possible to get a loan with scores as low as 620, programs other than Fannie Mae or Freddie Mac are probably the best path for a borrower with a lower score to take.
Equity in the Transaction
With the exception of mortgage programs guaranteed by the USDA and VA, no-down-payment loans have pretty much evaporated on a national level. Today it is expected that borrowers put a minimum of 3.5% down for an FHA loan and 5%-10% down for agency loans sold to Fannie Mae or Freddie Mac.
If someone is strapped for cash, however, it is still possible in the purchase contract to negotiate with the seller to pay a percentage of the closing costs, as long as it's within the program's limitations and the property appraises highly enough for this action to be permitted.
With the exception of the President's Home Stability Plan, it is no longer possible to refinance a loan without equity in the property. However, under this plan, millions of homeowners are expected to be able to take advantage of being able to refinance at a loan-to-value of up to 105% of the appraised value.
Cash-out refinancing has also been tightened, compared to just a few years ago. While pulling equity out of a home is still possible, the costs to do so have become more expensive for homes with a higher loan-to-value. Depending on the program, cash-out transactions have generally been limited to a maximum of 85% of the home's appraised value.
The Property
Home appraisals are also being more scrutinized today to ensure the value of the home is both fair and realistic for lender and borrower alike. On May 1st, new legislation (Home Value Code of Conduct or HVCC) placed a barrier between loan originators and appraisers for loans sold to Fannie Mae and Freddie Mac (legislation does not affect mortgages guaranteed by the FHA, USDA or VA.)
For those loans impacted by HVCC, all parties involved should be prepared for potential delays. If value conflicts occur, sellers, buyers, homeowners, and real estate agents must be prepared to provide information where needed.
In locations of the country where property values have been in significant decline, additional documentation may be required by the appraiser to help the lender justify the appraised value.
In Summary
Yes, getting a mortgage may be more difficult than it was a few years ago, but don't assume that you can't get one.
Reports suggest that over $2.7 trillion in loans will be originated in 2009 – that's over $1 trillion more than 2008. Contact the professional who supplied you with your copy of YOU Magazine. With interest rates at or near all time lows, lower home prices, and the $8,000 tax credit for first-time buyers, it's worth the time and effort to find out if you can benefit from common-sense lending in today's real estate market.
Changes in the real estate and mortgage markets have prompted many, including many in the media, to wonder, "Can you get a loan today?" For an answer to this important question, YOU Magazine turned to Barry Habib, an expert in the mortgage-backed securities market. Chairman of Mortgage Success Source and founder of Mortgage Market Guide, Mr. Habib has managed a hedge fund, authored a stock advisory newsletter, owned an insurance agency, and has been an avid real estate investor for many years.
Habib says that, yes, you can get a mortgage in today's market, but you have to understand that lenders have returned to a pre-2000 mindset – a kind of "common-sense lending" that seeks long-term success versus short-term profits. There's plenty of money available, says Habib, but your mortgage must make sense in today's terms, not the looser standards permitted by lenders in 2000 and 2001.
How Did We Get Here?
In 2000 and 2001, real estate was hot – make that white hot. According to the S&P/Case-Shiller Home Price Composite 10 Index, an index that follows home prices, values increased 21.5% from the years 1990-1999. During the first two years of this decade alone, home prices increased 23.6% for the same index. This resulted in a period of wildly loose lending guidelines that would ultimately fuel the subprime mortgage collapse in 2008.
In retrospect, it's easy to see, and even understand, the mistakes that were made during this unusual period of growth. Rapidly escalating home prices not only eased economic and personal financial woes, they invited opportunity and risk whose rewards, while hard to resist, couldn't possibly be sustained at such a high level. Nonetheless, increasing equity created flexibility that benefitted buyers and sellers alike – as long as property values continued to ascend.
During this time, borrowers with no jobs, no down payments, and poor credit histories could easily obtain financing. A host of exotic mortgage products flooded the market. And even if a borrower got into trouble, there was a multitude of options to help him or her climb out of the hole, including refinancing or even selling the property. A lot of people made a lot of money during this time.
But, as the real estate market began to turn and the economy began to suffer, home values slowed and then ground to a halt, and the true risk in the market was exposed. No longer supported by skyrocketing home values, borrowers had fewer options, lending guidelines tightened, adjustable rates adjusted, resulting in a crash in the market that is only now just beginning to turn.
What Does This Mean to Borrowers Today?
Simply put, home lending has returned to what insiders call a "full-doc world." This means lenders need proof, documented evidence that a borrower is creditworthy and likely to repay the loan. This creditworthiness is based on the four tenets of lending: the borrower's ability to pay, willingness to pay, equity in the transaction, and the property itself.
Ability to Pay
This is the documentation portion of the equation. In determining one's ability to repay a loan, it is now common for a lender to ask for recent paystubs, W-2s, and possibly tax returns in the case of a salaried employee. For self-employed borrowers and those earning commissions, tax returns for the two most recent years and a profit and loss statement for the current calendar year will likely be required. While certain exceptions may be granted, potential borrowers can further increase their chances of securing a mortgage by keeping their debt-to-income level below 45%.
Willingness to Pay
Repercussions of the credit crisis have made FICO scores more important than ever to lenders. In order to obtain the best interest rate and have a broader selection of loan programs from which to choose, potential borrowers should strive to keep their FICO score above 720.
Borrowers whose scores fall below 720 where the loan will be sold to Fannie Mae and Freddie Mac can expect risk-based pricing, which could result in either higher costs or higher rates. So, while it is possible to get a loan with scores as low as 620, programs other than Fannie Mae or Freddie Mac are probably the best path for a borrower with a lower score to take.
Equity in the Transaction
With the exception of mortgage programs guaranteed by the USDA and VA, no-down-payment loans have pretty much evaporated on a national level. Today it is expected that borrowers put a minimum of 3.5% down for an FHA loan and 5%-10% down for agency loans sold to Fannie Mae or Freddie Mac.
If someone is strapped for cash, however, it is still possible in the purchase contract to negotiate with the seller to pay a percentage of the closing costs, as long as it's within the program's limitations and the property appraises highly enough for this action to be permitted.
With the exception of the President's Home Stability Plan, it is no longer possible to refinance a loan without equity in the property. However, under this plan, millions of homeowners are expected to be able to take advantage of being able to refinance at a loan-to-value of up to 105% of the appraised value.
Cash-out refinancing has also been tightened, compared to just a few years ago. While pulling equity out of a home is still possible, the costs to do so have become more expensive for homes with a higher loan-to-value. Depending on the program, cash-out transactions have generally been limited to a maximum of 85% of the home's appraised value.
The Property
Home appraisals are also being more scrutinized today to ensure the value of the home is both fair and realistic for lender and borrower alike. On May 1st, new legislation (Home Value Code of Conduct or HVCC) placed a barrier between loan originators and appraisers for loans sold to Fannie Mae and Freddie Mac (legislation does not affect mortgages guaranteed by the FHA, USDA or VA.)
For those loans impacted by HVCC, all parties involved should be prepared for potential delays. If value conflicts occur, sellers, buyers, homeowners, and real estate agents must be prepared to provide information where needed.
In locations of the country where property values have been in significant decline, additional documentation may be required by the appraiser to help the lender justify the appraised value.
In Summary
Yes, getting a mortgage may be more difficult than it was a few years ago, but don't assume that you can't get one.
Reports suggest that over $2.7 trillion in loans will be originated in 2009 – that's over $1 trillion more than 2008. Contact the professional who supplied you with your copy of YOU Magazine. With interest rates at or near all time lows, lower home prices, and the $8,000 tax credit for first-time buyers, it's worth the time and effort to find out if you can benefit from common-sense lending in today's real estate market.
Thursday, June 4, 2009
Pending Home Sales Up for Three Months in a Row
Pending Home Sales Up for Three Months in a Row
RISMEDIA, June 2, 2009-Record low mortgage interest rates boosted pending home sales for the third consecutive month, with some benefit now from the first-time buyer tax credit, according to the National Association of Realtors®.
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in April, rose 6.7% to 90.3 from a reading of 84.6 in March, and is 3.2% above April 2008 when it was 87.5.
Lawrence Yun, NAR chief economist, said buyers are responding to very favorable market conditions. “Housing affordability conditions have been at historic highs, but now the $8,000 first-time buyer tax credit is beginning to impact the market,” he said. “Since first-time buyers must finalize their purchase by November 30 to get the credit, we expect greater activity in the months ahead, and that should spark more sales by repeat buyers.”
The Pending Home Sales Index in the Northeast shot up 32.6% to 78.9 in April and is 0.8% above a year ago. In the Midwest the index rose 9.8% to 90.4 and is 11.1% above April 2008. The index in the South slipped 0.2% to 93.0 in April but is 3.5% higher than a year ago. In the West the index rose 1.8% to 94.8 but is 2.9% below April 2008.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said there are numerous buyer assistance programs around the country. “Some states are offering bridge loans that allow first-time buyers to use the tax credit for downpayment and closing costs, but there are many other local government and nonprofit programs available to buyers, depending on location,” he said.
“Just last week, HUD announced that qualifying buyers can use the tax credit for closing costs on FHA loans, to buy down the interest rate or make a larger downpayment. Buyers who are wondering about their options should contact a Realtor®, who can advise consumers on the housing assistance programs and resources available in a given area.”
NAR’s Housing Affordability Index is in record territory. The affordability index rose to 174.8 in April from an upwardly revised 171.9 in March, and was the second highest monthly reading on record after peaking at 176.9 in January of this year. The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income; tracking began in 1970.
A median-income family, earning $60,900, could afford a home costing $296,800 in April with a 20% downpayment, assuming 25% of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small downpayments are roughly 80% of that amount. The affordable price was well above the median existing single-family home price in April, which was $169,800.
Yun cautions that the reporting sample for pending home sales is smaller than that of existing-home sales, so it is subject to greater variability. “In addition, the relationship between contracts on pending home sales and closings on existing-home sales is taking longer than in the past for several reasons,” he said. “Mortgage processing time has increased, it is taking many months to close on those homes requiring short sales with lender approval, and some sales are falling through at the last moment.”
The total number of existing-home sales is expected to improve but with dramatic local market variation in the timing of recovery. “The market has already bottomed in some areas, but this is an unusual housing cycle with some areas improving rapidly while others languish or decline,” Yun said.
For more information, visit http://www.realtor.org.
Read more: "Pending Home Sales Up for Three Months in a Row | RISMedia" - http://rismedia.com/2009-06-02/pending-home-sales-up-for-three-months-in-a-row/#ixzz0HUUwhaAo&A
RISMEDIA, June 2, 2009-Record low mortgage interest rates boosted pending home sales for the third consecutive month, with some benefit now from the first-time buyer tax credit, according to the National Association of Realtors®.
The Pending Home Sales Index, a forward-looking indicator based on contracts signed in April, rose 6.7% to 90.3 from a reading of 84.6 in March, and is 3.2% above April 2008 when it was 87.5.
Lawrence Yun, NAR chief economist, said buyers are responding to very favorable market conditions. “Housing affordability conditions have been at historic highs, but now the $8,000 first-time buyer tax credit is beginning to impact the market,” he said. “Since first-time buyers must finalize their purchase by November 30 to get the credit, we expect greater activity in the months ahead, and that should spark more sales by repeat buyers.”
The Pending Home Sales Index in the Northeast shot up 32.6% to 78.9 in April and is 0.8% above a year ago. In the Midwest the index rose 9.8% to 90.4 and is 11.1% above April 2008. The index in the South slipped 0.2% to 93.0 in April but is 3.5% higher than a year ago. In the West the index rose 1.8% to 94.8 but is 2.9% below April 2008.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said there are numerous buyer assistance programs around the country. “Some states are offering bridge loans that allow first-time buyers to use the tax credit for downpayment and closing costs, but there are many other local government and nonprofit programs available to buyers, depending on location,” he said.
“Just last week, HUD announced that qualifying buyers can use the tax credit for closing costs on FHA loans, to buy down the interest rate or make a larger downpayment. Buyers who are wondering about their options should contact a Realtor®, who can advise consumers on the housing assistance programs and resources available in a given area.”
NAR’s Housing Affordability Index is in record territory. The affordability index rose to 174.8 in April from an upwardly revised 171.9 in March, and was the second highest monthly reading on record after peaking at 176.9 in January of this year. The HAI is a broad measure of housing affordability using consistent values and assumptions over time, which examines the relationship between home prices, mortgage interest rates and family income; tracking began in 1970.
A median-income family, earning $60,900, could afford a home costing $296,800 in April with a 20% downpayment, assuming 25% of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small downpayments are roughly 80% of that amount. The affordable price was well above the median existing single-family home price in April, which was $169,800.
Yun cautions that the reporting sample for pending home sales is smaller than that of existing-home sales, so it is subject to greater variability. “In addition, the relationship between contracts on pending home sales and closings on existing-home sales is taking longer than in the past for several reasons,” he said. “Mortgage processing time has increased, it is taking many months to close on those homes requiring short sales with lender approval, and some sales are falling through at the last moment.”
The total number of existing-home sales is expected to improve but with dramatic local market variation in the timing of recovery. “The market has already bottomed in some areas, but this is an unusual housing cycle with some areas improving rapidly while others languish or decline,” Yun said.
For more information, visit http://www.realtor.org.
Read more: "Pending Home Sales Up for Three Months in a Row | RISMedia" - http://rismedia.com/2009-06-02/pending-home-sales-up-for-three-months-in-a-row/#ixzz0HUUwhaAo&A
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