Why Rates are Down!

Mortgage rates fall to 37-year low
Rates on a 30-year fixed mortgage dropped to 5.19% this week, after the Fed slashed interest rates to historic lows.

By Lara Moscrip, CNNMoney.com contributing writer
Last Updated: December 18, 2008: 11:27 AM ET

NEW YORK (CNNMoney.com) -- Mortgage rates fell this week, with the 30-year fixed mortgage sinking to its lowest rate in 37 years as the Federal Reserve cut interest rates to historic lows.
Government-sponsored mortgage lender Freddie Mac (FRE, Fortune 500) said Thursday that fixed rates on 30-year mortgages averaged 5.19% for the week ending Dec. 18. That's down from 5.47% last week and below the year-ago rate of 6.14%.
"Interest rates for 30-year fixed-rate mortgage rates fell for the seventh consecutive week, moving these rates to the lowest since the survey began in April 1971," said Frank Nothaft, Freddie Mac vice president and chief economist.
"The decline was supported by the Federal Reserve announcement on December 16th, when it cut the federal funds target to a record low and stated it stood ready to expand its purchases of mortgage-related assets as conditions warrant."
In a bid to reduce interest rates and to stabilize the housing market, the government in late November announced a plan to buy $500 billion worth of mortgage-backed securities and $100 billion of debt issued by government-sponsored mortgage financiers Fannie Mae (FNM, Fortune 500) and Freddie Mac.
The 15-year fixed rate mortgage this week fell to its lowest rate in four and a half years. It averaged 4.92%, down from 5.20% last week. A year ago at this time, a 15-year fixed rate loan averaged 5.79%.
Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARM) averaged 5.60% this week, down from last week when it averaged 5.82%. At this time a year ago, the 5-year ARM averaged 5.90%.
And the one-year Treasury-indexed ARM averaged 4.94% this week, down from last week when it averaged 5.09%. Last year, the 1-year ARM averaged 5.51%.

First Published: December 18, 2008: 11:16 AM ET

Can you still get a mortgage loan in Texas?

In today's 24/7 instant news now environment we hear a lot of talk about mortgage loans drying up and banks refusing to lend to the everyday buyer. It leaves a person to wonder, can I even get a loan to buy a house?

In an effort to clear up all this confusion, I interviewed one of my favorite lenders, Doug Martin with DFW Texas Home Mortgage and asked him some very direct questions concerning home loans in Texas.

Q: Can buyers still get a mortgage loan in today's market and what is the minimum credit score a buyer would need to qualify?

A: Mortgage loans are readily available for buyers that qualify. The big difference today is that zero down financing no longer exists. The minimum down payment requirement is now 3% and we can do this with a mid credit score as low as 600. The 3% can also be a gift from a relative or a loan from a retirement plan. When you hear on the national news that mortgage lending has dried up, that is just not true for the state of Texas.

Q: What about interest rates?

A: Today's interest rates are at the lowest level since 2003. A qualified borrow can get a 30 year fixed rate for 5.50%.

Q: I heard on the news that there is a potentially unconventional move about to be made by the Treasury Department to help bring rates down even further. Do you know anything about that?

A: There is a rumor that the US Treasury Dept. is exploring a plan for Fannie Mae and Freddie Mac to buy up more mortgage-backed securities (MBS) to help drive borrowing costs approximately 1% lower than this week’s current level of 5.53%. Now there are a couple of things to keep in mind. The Treasury Dept. already has authority to buy billions of dollars of mortgage-backed securities and has yet to use that authority to any large degree. The Federal Reserve did announce plans to buy $500 Billion dollars of MBS from Fannie and Freddie on Monday. This did cause a lower spike in rates on Monday but rates closed flat to slightly higher at the end of the day. So the bottom line is, currently there is no concrete plan in place with qualifying parameters or any type of timeline for implementation if this plan actually takes form. So based on today’s rates, it is a great time to buy or refinance a current mortgage to lower your interest rate.

So in summary, yes, you can still get a loan and qualify for a great rate! The opportunity to buy has never been greater than in today's market.

Fed Aid Sets off a Rush to Refinance and Purchase

The Federal Reserve's attempt to stabilize the housing market set off a chain reaction across the U.S. on Tuesday, dropping interest rates and quickly spurring a burst of refinancing activity by borrowers eager to lower their mortgage costs.(more)

The Simple Truth about Short Sales and Foreclosures in N. Texas

My team and I have noticed that in today's market, everyone is interested in learning more about short sales and foreclosures. They seem like such a great bargain! Our Accounts Manager has been getting 1 - 3 calls a day on this subject alone. Now, you can find out the simple truth about Short Sales and Foreclosures in N. Texas.

Short Sales - A short sale is a home that has not been foreclosed upon yet. The seller has been delinquent on payments and has worked out an agreement with his/her lender to allow the home to be sold for less than what the seller owes on the house in order to avoid foreclosure proceedings. Even though the lender will be receiving less money than they are owed upon the sale of this home, they will be saving money in the long run by avoiding the expensive costs that go along with foreclosure proceedings including court costs, attorney fees, etc. The seller avoids being locked out of their home and possibly losing some or all of their possessions. They also will only have delinquent payments on their credit score and not a foreclosure.

What's in it for you? The fact that the home is a short sale generally equates to the home being under market value. Since the N. Texas market is fairly stable, without drastic plunges, that could mean instant equity for you! Also, a short sale home typically has an owner/seller that wants to get the home sold, not one that is bitter that the home is being taken away from them. This means that the home is generally in better shape overall than a foreclosure.

So what are the negatives? A short sale, just like a foreclosure, is typically sold "as is", meaning you should still have a right to an inspection (which is HIGHLY advised by this REALTOR), but don't plan on the seller or lender paying for any repairs. They are already losing money. This means if the home needs new flooring or needs air conditioning work YOU will be footing the bill. One nice thing is that FHA is now offering a new loan called a 203K Streamline Rehab. This allows you to finance in the cost for a lot of repairs into your mortgage. Speak to your favorite lender about this or contact my team for a lender recommendation.

The other big negative in some cases with a short sale is the time it takes to get a response. In a majority of cases, there will be multiple offers on a short sale property because they are such good deals. However, most lenders can take weeks to get back to potential buyers and their agents with a response. If you have the time and patience, this can work to your advantage as most buyers typically lose patience and move on to other properties. Remember though, it does take patience. In some cases, the home will go into foreclosure before you even get a response! However, a good buying agent and a good selling agent can stop this MOST of the time with cooperation from the bank.

All and all, a short sale property is a good deal for you if it needs little repair or you have the funds/capability to handle the repairs needed and you have time and patience, which can be tough to come by when planning to purchase a home.

Foreclosures - One of the most common questions asked to our Accounts Manager about foreclosures is "Do I have to pay any back taxes if I buy a foreclosure?". The answer is NO. The lender that owns the property is responsible for paying all back taxes. Make sure that an owners' title policy is issued at closing. This ensures a good title. Your title company will issue this insurance policy. This is a policy that guarantees good title even if an unknown lien surfaces after closing. You will not be responsible for any past liens on the property that occurred before you purchased. The story is different if you were to go and buy a home in a courthouse steps auction, but in the case of a foreclosure listed by a real estate agent, the facts above are true.

What are the advantages to you for purchasing a foreclosed property? Foreclosures, like short sales, can be a good deal. However, the bank does want to avoid as much loss as possible. They will list a foreclosure at market value and only knock the price down after the home has set on the market for a certain amount of days. Also, they will only negotiate down substantially regarding the same situation. However, it never hurts to try to get a good deal on a foreclosed property because after all, it is all just a numbers game. In most cases you do not run the chance of offending the seller, which is the lender. Unlike dealing with an emotionally tied owner/occupant, if the numbers work for the lender they work. They will counter if the numbers don't work. However, outrageously lowball offers can be outright rejected, such as an offer for 50% of the asking price. I have seen this happen. Remember, the bank, just like any other seller, could list and sell the home for more than 50% of market value. They will not be that taken advantage of and can afford to hold on to the property until a more reasonable buyer comes along. If that means dropping the price by 10% - 15% to find that buyer it is still more advantageous to them than giving it away at 50% of market value.

What negatives should you expect? Just like with a short sale, a foreclosure is sold "as is". You are buying the property just the way you see it. Be smart and get an inspection! You do not want to get trapped in a money pit. Also, foreclosures are typically more beat up than other homes on the market. The previous owner may have taken out their angst on getting foreclosed upon on their soon to be foreclosed upon property. I have seen foreclosures with all the door knobs taken out as well as the appliances. Most need the flooring replaced and a good paint job too. Bathrooms can be a nightmare as well. You can luck out and buy a foreclosed home that is only a year or two old that needs very little work, but these are not on the market very often.

When it comes to short sales and foreclosures in general, a good real estate agent is key. Your agent can advise you on the actual market value of the property, recommend vendors for quotes on repairs, and should know how to negotiate with the banks and handle any issue that may arise. My team has a plethora of experience in both short sales and foreclosures and we are happy to consult with you and make sure you get the best deal possible with the least hassle on a home you love. Contact us today and lets get started! 1-800-720-2197

DFW Market Statistics for October 2008 Year to Date

Nobody said that our market was golden right now. However, it is not as dire as the media portrays it. The latest research has come out from the North Texas Real Estate Information System that shows the statistics of our market year to date from October 2008. The number of sales for this year is down from last year but the average sales price in most areas of DFW has either gone up or stayed the same. For example, Frisco's average sales price is up 2% over last year and Coppell's average sales price is up 8%. Average days on market is generally 90 days or less with Coppell having one of the lowest average days on market of 54 days. Grapevine's average days on market is only 50 days. People are still selling and buying in the N. Texas area! Please look at the spreadsheet I've compiled below below for more detailed information.

What do Agents Do For the Commission?

I just heard a commercial over the radio from a local real estate brokerage advertising that they will never charge you, the seller, 6% commission. That it was unfair and that they could save you thousands on the commission when you sell your home if you list with them. "How are they doing that?", I thought. I went to their website and their "services menu". What did I find? Basically, no services! Yes, they will list your home for 4% versus a traditional 6%, with 3% going to the buyers agent and 1% going to them. Seems fair and reasonable, right? Wait! That is the ONLY service they offer. They will put your home in the MLS. There are services out there that will do that for MUCH cheaper. What about marketing, negotiating, handling of issues that come up? THAT my friend, is where the REALTOR earns their money. Anybody with a pulse and a real estate license under a broker can simply put your home in the MLS. Although this is an important tool, IT WILL NOT GET YOUR HOME SOLD, that is unless you price it WAY BELOW MARKET. Thus, not saving you thousands, but costing you thousands. You need an experienced agent that knows how to market your home online and to other agents. You need an agent that knows what is effective when it comes to online marketing and how to get your home seen by other buyers and agents around the globe. Simply listing your home in the MLS will not do that. You need proper property photography, effective verbage, and the capablity to get this listing, along with multiple photos, on major websites and search engines.

The next time you consider one of these "caring" real estate agents that claim to be looking out for you, consider the whole cost. Dig deep with your questioning, ask for marketing examples or a marketing portfolio of their current and past listings. Seller BEWARE!

The BW Home Team offers our clients a break on the commission when they sell their home with us and purchase their next home with our team, while offering excellent, aggresive, professional, marketing and negotiating skills. We welcome all your questions!

Afraid to jump into the real estate market?

Many buyers and sellers that I have spoken to recently are afraid to jump into the real estate market right now. With all the doom and gloom from the media, who can blame them? Sellers are afraid that they'll lose all their profits and equity, while buyers are afraid they'll buy a home and it will lose a big percentage of its value in a short time. So, when is the right time to buy or sell?

In Dallas/Fort Worth, any time is relatively safe. Our market was never in a real estate bubble like we've seen on the east and west coasts and while we have seen home values go down 1 - 2 percent or so in certain areas, mainly home prices are holding steady, not rising or falling. Granted, there are more foreclosures on the market right now and some relocation company owned homes are basically being given away, so there are deals out there, but I don't see home prices tetering on the edge of a cliff, getting ready to plunge down a large percentage.

I will be putting my own personal home on the market this coming spring and purchasing again, regardless of the news the media is putting out at the time. There are always going to be buyers out there, and DFW has gotten some good press on being a great place to work and live. The main thing you should be concerned about is whether your family needs a larger/smaller/more efficient, etc. home right now. The market is not as scary as the national news makes it sound. We are still moving here in Texas!

Is your Realtor still around and if so....for how long?

In response to the recent problems in our nation's economy, 8% of the real estate agents in the DFW area have decided to give up on our market. Predictions are, we will see another 2% - 5% before the end of 2008. Is your agent still in business?

Most agents that get out of the real estate market when times are slower are generally considered in our profession to be "hobby agents". These are agents that try to do real estate on the side, helping an occasional family member or friend. However, generally instead of "helping" that family member or friend, they are hurting them, in most cases more than that client would expect. Hobby agents do not have the experience that full time agents, that is, agents that earn their living through helping people buy and sell real estate, have. 80% of the agents in America typically only handle 2 closings PER YEAR! How can those agents negotiate and get their clients the best deal possible, leaving no money on the table? How can they look out for all the contract loopholes and know how to solve all the unique problems that pop up on almost every contract?

When it comes to choosing your next agent, remember, YOUR family, and YOUR income comes first. Don't worry about hurting someone's feelings. Choosing a Realtor is a business decision and you should go with someone or some team that has experience, education, and also makes you feel comfortable and can easily answer most if not all of your questions. You want an agent/team that is stable and can last through all the highs and lows of the market. Don't cheat yourself!

The Need for Title Companies in Texas

Here I interview Cathy McMullen of LandAmerica American Title in Texas about the need of a title company in Texas.

Demystifying Texas Homeowners' Insurance

Watch Jason Ridley with Allstate and I discuss pertinent topics regarding Texas homeowners' insurance.

Texas Mortgages: Conventional versus FHA Loans, Predatory Lending, and Interest Rates

Doug Martin and I discuss relative topics regarding the Texas mortgage industry.

$7500 First Time Homebuyer Tax Credit - Is It A True Credit?

Is the $7500 first time homebuyers tax credit that we have been hearing about truly a tax credit similar to the child tax credit? The answer is NO! In truth, this tax credit is really an interest free loan from the federal government to be repaid over 15 years.

This is how it works:

1. A first time homebuyer that purchases a home after 4/9/2008 files for the $7500 tax credit on his/her 2008 federal taxes and receives a nice return. For example, if you owe $5000 in federal income taxes you would pay nothing to the IRS and receive a $2500 tax return from the government. If you are due $1000 tax return, you would get an $8500 tax return with this tax credit.
2. Here's the kicker. When this first time homebuyer files his/her 2010 taxes if they claimed the credit on their 2008 taxes, they would have to pay $500 back to the government on top of what they already owe on their income taxes or to be deducted from what they would be getting as a tax return. The reason why I state 2010 is because the buyer doesn't have to start repaying the credit until two years after the tax year in which the credit was claimed. For example, if you owe $5000 in federal income taxes you would be required to pay $5500 to the IRS. If you are due a $1000 tax return, you would get a $500 tax return instead. This would continue each year for up to 15 years until the $7500 is repaid.
3. If the first time homebuyer sells the home, the remaining "credit" would be due from the profit of the home sale. If there was insufficient profit, then the remaining credit payback would be forgiven.

Not all people will qualify for this tax "credit" or for the entire $7500.

Who qualifies:

1. A first time homebuyer is defined by law as someone who has not owned a home or has not owned a home in the past three years.
2. First time homebuyers that purchase their home between April 9, 2008 and July 1, 2009.
3. Single or head of household buyers can claim the full $7500 if their adjusted gross income (AGI) is less than $75,000.
4. Married couples filing jointly can claim the full $7500 if their combined AGI is less than $150,000.
5. Single or head of household buyers who earn between $75,000 to $95,000 AGI are eligible for a partial "credit".
6. Married couples filing jointly who earn between $150,000 to $170,000 AGI are eligible for a partial "credit".
7. The "credit" is NOT available for single buyers earning greater than $95,000 AGI and married couples with an AGI that exceeds $170,000.

So, should you file for this "credit"? If you are in good credit standing and in no need of some immediate cash, I wouldn't. This will hang over your head each year until the "credit" is paid off and if you decide to sell before the "credit" is repaid, you would be responsible for paying the remainder of the "credit" in full from the profit of the home. Thus, no additional money to put on the downpayment of your new home. Now that you have the knowledge, the choice is yours.

For more information on this first time homebuyer "credit", contact your accountant and/or visit http://www.federalhousingtaxcredit.gov/ .

Flower Mound and Southern Denton County Housing Market

Several people have come up to me over the past few months with questions about the housing market in Flower Mound, Highland Village, Double Oak, and surrounding areas. I have decided to post on real estate market statistics about several DFW areas that our team works to inform buyers and sellers what it is really like out there, starting with Flower Mound and S. Denton County.

Here are the hard, cold facts:

S. Denton County - August 2008 YTD - Single Family Residences:

Number of Sales: 2648

Percent of Change vs. Prior Year: -20%

Average Sales Price: $241,672

Percent of Change vs. Prior Year: -4%

Average Days on Market: 69

Percent of Change vs. Prior Year: +25%

So what does this all mean? To you, the homeowner, it means that you can still sell your house in an average of 69 days and possibly sell it for 4% less than August of 2007. In numbers, that works out to a sales price on average of $241,672 this year versus a sales price of $251,338, a difference of $9666.

At first thought, this can seem doom and gloom. However, you can look at it a different way. Now is the PERFECT time to buy if you have good credit. You just have to change your perspective. If it were a sellers' market, you would get an awesome price on your house but you would also pay a pretty high premium on your next one. This can be your opportunity to lease out your current home and get a great deal on your dream home. You can also sell your current home and still make up for the difference on the buy side. I just represented a buyer today that purchased a home owned by a relocation company. The relo company had to bring $30K to closing. The payoff was $15K more than my client's sales price. Now, this is rare and won't happen in every situation, but deals are out there if you are patient. Relocation companies will also generally not accept a contingency on the sale of another home, but if you were going to lease your current home, what a perfect opportunity!

If you are ready to move, you can still do it! You can still sell your house in a reasonable amount of time and you can get a good deal on your buy. You just have to be ready to go for it!

We're the 2008 Reader's Choice Award Winners!

Today our team was presented with the 2008 Readers' Choice Award for Best Realtor(s) in Flower Mound and Lewisville by the Star Community Newspapers (Flower Mound Leader and Lewisville Leader)! What an honor! Subscribers or newspaper buyers filled out a ballot insert in the paper and wrote in their choice for best Realtor and mailed the ballot in. This is the first year that we have been receipients of this award and we are thrilled! Our brokerage, RE/MAX DFW Associates, won the best real estate brokerage in Flower Mound in Lewisville too.

We are really striving hard to provide our clients with excellent customer service and apparently it is paying off! We want to be the "Disney" of real estate. Look for us in next week's paper!