Browsing the archives for the Real Estate Finance tag.

Is Now a Good Time to Buy?

Economic Outlook, Home Buyers, Investors, Real Estate, Real Estate Finance

 

I received an email earlier today from a friend moving back to Dallas! Welcome Back! You know who you are.

My friend asked, Is now a good time to buy home? And what about those interest rates? How long will they last?!

I’ll give you the quick 411:

Home prices have gone up due to the shortage of inventory. There’s a lot of buyers in the market and not enough sellers. This is leading to an increase in home prices and a very competitive market. Gone are days of “lowball” offers.   The spike we have seen in price per sq ft for some areas is due largely to the lack of inventory and we will eventually see a market correction.  This should not deter you from considering a purchase. Interest rates are at an all time low.

The low  interest rates are an artificial low, as a result of the fed pumping money into the economy.  No clue how long it will last – but it can’t last forever. While I believe the mortgage rates should be low through the end of the year, they can only go up from here.

The first and most important step to becoming a home owner is: Talk with a lender.  Get pre-qualified. This will give you an idea of how much you qualify for, and how much you would be putting down. In addition, it will show to a seller you are a motivated and serious buyer.

So, is it better to wait to sell or buy? NO! History has proven that this bubble won’t last forever, interest rates will go up, and housing prices will fluctuate up and down accordingly.  Take advantage of the market. If you are a buyer take advantage of those low interest rates.  You have more purchasing power right now!

There are still some really great loan options for first time home buyers.  Please let me know if you need lender references.

My friend offered to buy me drinks / dinner in return for my time.  While I am Italian and will never turn down an offer for good food, there is no consulting fee.  I am your source for free information. I believe in educating my clients so they can make financially sound decisions.

If you are a first time home buyer or savvy investor (looking to buy or sell), please feel free to contact me.

What if I am a home seller, you ask?  Don’t wait! I’ll explain more in my next post: Is now a good time to Sell?

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FHA Changes Coming Soon

East Dallas, Real Estate Finance, Resources

I recently received an update from one of my preferred lenders.   FHA has made some changes and the first change will begin on April 1, 2013.  There are several changes but there are two primary changes home buyers need to be aware of:

Changes coming soon to FHA Loans1.Beginning on April 1 the monthly mortgage insurance premium will go up to 1.35% (from 1.25%) for 30 year and 15 year loans with a loan to value of more than 95%.

2.  Effective June 3, 2013, FHA will collect this monthly mortgage insurance premium for the life of the loan, yes even when the balance falls below 78%.

What does this mean for you?  If you plan on purchasing a home using FHA financing, you will save a lot of money if you get a contract soon.

Feel free to forward or share this with anyone you think it will help and as always, if you have questions be sure to contact me.

If you have any financing questions, give Les a call.

 

Les Tuttle #313115
Cendera Funding #179242
214-221-4008
www.lestuttle.com

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Economic Forecast 2012: What you need to know!

Home Sale Statistics, Investors, Lakewood, Real Estate, Real Estate Finance, Resources

Last week I attended an economic forecast presented by DFW MetroTex Board of Realtors.

 http://www.dfwrealestate.com/forecast2012presentations

Here’s what you need to know.  Economists predict moderate job growth for 2012.

We are in a unique recession.  In the past, economic recovery has been lead by the housing market.  However, due to high unemployment rates, a lack of consumer confidence, and continued credit contraction, the demand for housing remains low.  Unless congress creates the policies to encourage businesses to hire we will see at best modest job growth. It appears that major business investment decisions will be postponed until after 2012 election, resulting in sluggish job growth into the first quarter of 2013.

The good news: Texas as a whole has outperformed the national average.  We lagged into the recession.  While real estate values are location specific, DFW did not experience the boom and bust that affected the Sand States.  Our economy has continued to grow at a rate above national levels, and the projected job growth and expected increase in population is an indicator that we will lead in the national recovery.

Here’s the best news!  There has never been a better time to purchase Real Estate! Interest rates remain low.  FHA has first time home buyer programs allowing buyers to finance a home with 3.5% down.  And a high volume of foreclosures causes distress in the market place that will continue to affect sellers’ values and provide plenty of options to the deal seekers.

 

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New Loan Limits are Now in Effect

Home Buyers, Investors, Real Estate, Real Estate Finance, Resources, Uncategorized

There were a few mortgage loan program changes that went into effect onOctober 1, 2011.   I contacted local loan officer, Les Tuttle, to outline the new conforming loan limits and to discuss what role they play in our market place.

Essentially there were no changes to the FHA program, so things there stay the same.   However the USDA program will increase a buyer’s’ monthly payment since monthly mortgage insurance has been added.  And with the changes made to the VA program,   buyers will benefit by having a lower funding fee that is rolled into their mortgage.

If you look at the chart below, you will see Les has included the loan limits for properties with up to 4 units.  These can be financed on an FHA note, and would require 3.5% down, with an average interest rate of 4%.  What a great way for a first time buyer to begin building their investment portfolio!

 The following is a list of the changes:

  1. Conforming and FHA loan limits have been lowered in some parts of the country.   The conforming loan limit is the maximum loan amount Fannie Mae and Freddie Mac will purchase and the FHA loan limit is the maximum loan amount HUD will insure.  The good news for all of us in the DFW area and inTexasis the loan limits have remained the same so if you hear the amounts have been changed you will know that in our area they have not changed.  The limits vary from 1 unit properties to 4 unit properties and the limits are as follows:

Conventional                                       FHA

1 unit               $417,000 maximum                            $271,050 maximum

2 units             $533,850 maximum                            $347,000 maximum

3 units             $645,300 maximum                            $419,425 maximum

4 units             $801,950 maximum                            $521,250 maximum

2.   USDA has changed the guarantee fee.  There was always a 3.5% guarantee fee that was rolled into the loan amount and there was no mortgage insurance premium paid in the monthly payments.  Now the upfront fee is 2.0% but there is a monthly premium of .3%.  If the property qualifies and the borrowers qualify this is still an excellent program because there is no down payment.

 3. VA has changed the funding fee.  A qualified Veteran with less than 5% down payment (a veteran can put 0% down) using the benefit for the first time will see the funding fee drop from 2.15% to 1.4%.  This funding fee is rolled into the mortgage and there is still no monthly mortgage insurance premium.  This is an excellent benefit for our veterans.

 

As always, you can contact me with any questions.  Also feel free to contact Les Tuttle.

Visit my blog:              www.realestatemarbles.com/lestuttleblog

Visit my website:        www.lestuttle.com

Office phone:              214-221-4008

Email:                          les@priorityapproves.com

 

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The Investment Alternative

Home Buyers, Home Sale Statistics, Investors, Real Estate, Real Estate Finance

To say the investment market is unsettling is an obvious understatement. The market is down 8% in the last ten days and the news doesn’t give much hope that things are going to get better in the near term.

Preservation of capital is probably today’s most important investment consideration and making a profit would be a bonus. Of all the conventional investment alternatives like stocks, bonds, mutual funds, gold, commodities, CDs and annuities, housing is the best asset class in America.

Homes have had a 30% to 40% price correction in the past four years. Mortgage rates are at near all-time low rates with 30 year terms available for investors. Rents have increased significantly over the past two years while vacancy rates have decreased. People will always need a place to live.

Five year certificates of deposits earn a little over 2% but rental properties are yielding eight to ten times more than that. Income properties are tangible assets that have benefitted dramatically in inflationary times. Cash assets can be devastated by inflation and diversifying into income properties can provide real protection.

Single family homes offer investors the opportunity to borrow large loan-to-value mortgages at fixed rates for long terms on appreciating assets with tax advantages and reasonable control. Investing in rentals can provide stability, safety and a higher rate of return.

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Top 10 FHA Loan Advantages

Home Buyers, Real Estate, Real Estate Finance

Now is a great time to purchase!

Fannie Mae and Freddie Mac underwritten conventional, FHA and VA loans account for the vast majority of mortgages chosen by buyers to finance their home purchase. While buyers have the choice on which product to use, there are some considerable advantages to FHA.

  1. More tolerant for credit challenges than conventional loans.
  2. Lower down payments than conventional loans.
  3. Broader qualifying ratios – total house payment with MIP can be up to 31% of borrower’s monthly gross income and total house payment with all recurring debt can be up to 43%.
  4. Seller can contribute up to 6% of purchase price – this money must be specified in the contract and can be used to pay all or part of the buyer’s closing costs, pre-paid items and/or buy-down of the interest rate.
  5. Self-employed may qualify with adequate documentation – two year’s tax returns and a current profit and loss statement would be required in addition to the normal qualifying and underwriting requirements.
  6. Mortgage Insurance Premium can be released in five years when the balance is 78% of original sales price
  7. Liberal use of gift monies – borrowers can receive a cash gift to assist in purchase from family members, buyer’s employer, close friend, labor union or charity. A gift letter will be required specifying that the gift does not have to be repaid.
  8. Special 203(k) program for buying a home that needs capital improvements – requires a firm contractor’s bid attached to the contract specifying the work to be done. The home is appraised subject to the work being done. If approved, the home can close, the money for the improvements escrowed and paid when completed.
  9. Loans are assumable at the existing interest rate – assumptions require buyer qualification but are actually easier than qualifying for a new mortgage. Closing costs are lower on assumptions than originating a new mortgage.
  10. If the rate on the assumable mortgage is lower than current rates for new mortgages, it could add value to the property.

If you are considering purchasing a new home, let a professional Realtor guide you through the process.  With over 9 years of experience in Residential Real Estate, I have a strong network of real estate professionals including lenders, inspectors and escrow agents, who can help make your home purchase a flawless transaction!   Contact me if you have any residential real estate questions!

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One More Chance?

East Dallas, Home Buyers, Lakewood, Real Estate, Resources

Fixed Rate mortgages are at their lowest level for 2011 as reported in the current Freddie Mac weekly Primary Mortgage Market Survey. Many qualified buyers missed the opportunity last fall in October and November to refinance at record low rates. This may give homeowners one more chance to refinance and save money on their payments.

An important thing to keep in mind is that points paid in connection for refinancing a home are generally not considered prepaid interest and must be spread over the life of the mortgage. Some advisors suggest that you have the lender quote a “par value” loan to eliminate the points which will lower refinancing costs even though the mortgage rate will be slightly higher.

Additional income tax information is available in IRS Publication 936.

As a professional REALTOR, I am here to help you with your home buying needs.  Please contact me if I can be of service!

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