Austin Real Estate Blog

What Did Interest Rates Do This Week?
** based on Freddie Mac weekly average survey **

30-yr Fixed – Lower
This Week:  4.78% (lowest since April 30, 2009)
Last Week:  4.83%
1yr Ago:  5.97%

15-yr Fixed – Slightly Lower
This Week:  4.29% (record low)
Last Week:  4.32%
1yr Ago:  5.74%

Jumbo Fixed (Average 30-yr Fixed)
Last Week:  5.75%Previous Week:  5.75%

Highlight of This Week’s Major Economic Reports

Despite the nation’s economic challenges, there’s a lot to be thankful for this year.  For one, the housing market has started to see stabilization – thanks in combination to historic low interest rates and increasing affordability.  Then, there’s the first-time buyer tax credit, which was set to expire on December 1^st and has since been extended to April 30^th.  The original expiration helped to prop up home sales in October, which saw the fastest sales pace since October 2007, with existing home sales jumping over 10% and new home sales spiking 6.2% from September’s figures.

What to Look for Next Week

The latest unemployment picture will be framed with the release of November’s employment report.  Even though unemployment claims have slowly dropped in recent weeks, it’s expected we’ll see a rise in the 10% unemployment rate through the end of the year.

Short-Term Rate Outlook
Relatively Unchanged

Stay Informed:  What’s in the News

“America’s Fastest Recovering Cities” – Austin #3 from Forbes.com

http://www.forbes.com/2009/11/19/cities-recovery-unemployment-lifestyle-real-estate-top-ten_print.html

“Texas’s Existing Home Sales Climb, Prices Inch Up” from Texas A&M Real Estate Center

A total of 19,347 existing single-family homes were sold in Texas last month, a 15 percent increase from October 2008, according to MLS data compiled by the Real Estate Center at Texas A&M University.

The median price rose 1 percent to $143,300 during the same period, and the state finished the month with a 6.9-month inventory of existing homes.

Here is how select Texas cities fared in October (data current as of Nov. 24, 2009):

“US Job Losses to Bottom out Next Quarter: NABE” from CNBC.com

Economists expect the joblessness that has weighed down the nation’s economic recovery will start to slowly abate in 2010, but they predict consumers will continue to keep a tight rein on spending, according to a new survey.

“Fed Remains Cautious on Strength of Recovery” from The New York Times

The Federal Reserve’s new economic forecast and minutes from a session earlier this month reveal that policymakers continue to fret over whether the economy is strong enough to hold up without government stimulus efforts, such as the temporary fiscal programs for the housing sector. Concern about the recovery comes as Fed officials begin debates on when to start raising interest rates, which have been held at virtually zero since last December, and on ending their program to purchase $1.25 trillion in mortgage-related securities. The real estate industry fears an increase in mortgage rates, but the Fed also wants to focus on reducing its holdings and bringing its balance sheet back to normal.

Marie Funston | Sr. Mortgage Advisor | (512) 750-7270
9442 N Capital of Texas Hwy., Suite 1-600
Austin, TX 78759
Fax:  (512) 343-1224
Marie@austinmortgageadvisor.com

Reports suggest that the real estate market is gradually recovering but at a snail’s pace. There are frequent upheavals and this is evident from the RECI or the Real Estate Confidence Index which keeps track of views and opinions of real estate agents as well as brokers and their “forward-looking” sentiment of United States’ real estate market which recorded 5.59 in October as compared to 5.83 in September. As rates are still low, home refinance is an option that majority of the homeowners are turning to. Some are also taking help of loan modification.

Home refinance may be for you

It was observed that properties that ranged in between the low and mid priced ranges kept the real estate as well as the mortgage market active. The mortgage market which is still volatile is yet to recover fully and statistics suggest that about 6.7 million households in the US having mortgages have fallen behind on payments (as per MBA or Mortgage Bankers Association). Every homeowner is striving hard to become current with their payments again so that they don’t lose their home in foreclosure.

One of the best ways to save your home from being foreclosed is to opt for home refinance and that is what majority of the homeowners are doing if it is an appropriate choice for them. What do you mean by an appropriate choice? There are many factors that decide whether or not the time is ripe to opt for home refinance.

When should you refinance your mortgage?

Some of the factors that help you to decide whether you should refinance your mortgage are as follows –

Opt for home refinance when rates are low

Low rates can drive you to opt for home refinance. This is what majority of the homeowners do. This can make your mortgage payments affordable.

Weigh the short term and long term benefits

Find out how refinancing your home will affect your long term as well as short term financial goals.

Do you want lower monthly payments and reduced interest rates?

Home refinancing will allow you to enjoy lower payments and reduced interest rates.

Do you want to switch from adjustable-rate mortgage to fixed-rate mortgage?

Often it is seen that homeowners refinance if they are currently making payments as per adjustable-rate mortgage but want to switch to fixed-rate mortgage that makes their payments predictable. This is advantageous as you can plan out your finances well in advance.

Are you looking forward for some extra cash?

If you have enough equity in your property, you can opt for home refinance to get access to some extra cash that can be used for meeting your other financial obligations.

Build up equity in your property

Home refinance is also a good option if you want to shorten the length of the loan term. Homeowners usually do so in order to pay off mortgage faster so that they can build equity in the property faster.

If you are planning to refinance your mortgage, do so only if it is beneficial for you. It is important that you don’t opt for home refinance only if one of the factors mentioned above match your requirements. This is because whether you refinance your mortgage or take out mortgage for the first time, you are putting your home at stake.

Guest Blogger: Peter Gomes

While many home loan companies banked on a rising housing bubble, the Federal Housing Administration (FHA) remained steady with regulations and guidelines. This has allowed them to continuously support middle and lower income families and their effort to move into a home. When the housing bubble broke, the FHA continued as it had during the housing bubble.

The rules and guidelines for obtaining FHA loans have allowed the organization to maintain solid footing through a fiscal and real estate crisis. This means that FHA loans have been secured and have avoided the pitfalls of many banks and mortgage institutions.

With this solid footing in mind and all of the recent federal spending, Commissioner Dave Stevens has announced some new, appropriate steps to protect the tax payers backing FHA loans. The modifications are shifting the responsibility for the mortgages from the taxpayers who have shouldered it thus far to the lenders using mortgage brokers for the FHA home loan process. This enables a shield of protection for the taxpayers. Additionally, the FHA has modified requirements for appraisers, calling attention to geographic competence and appraiser independence from mortgage brokers and loan companies. This protects the home buyer and seller with a more accurate appraisal. Lastly, the approval process has been revamped with spot approvals removed and some loosening of the commercial space limits on subject properties.

With these changes, the Federal Housing Administration stands alone in the mortgage industry, and on solid ground. They are moving steady through the dangerous waters of real estate and economic decline. As always, give us a call if you have questions when seeking a FHA home loan or need information about your real estate related question.

The process of purchasing a home or property is often confusing enough without the industry jargon. In an effort to alleviate that confusion that comes from some of the jargon, below is a short list of terms and the meanings. In order to help further the understanding of terms associated with the real estate purchase process here are some mortgage specific definitions and explanations.

Two step Mortgage – this is a hybrid home loan that starts as a fixed rate for an agreed upon number of years. When those years have passed the interest rate will become adjustable. Some examples of this kind of mortgage are the 5 and 7 One ARM (adjustable rate mortgage)

Balloon Mortgage – this is a steady monthly mortgage that will amortize over time and will provide a lump sum payment due at the end of the term. This price will cover interest, principle, and in rare cases taxes. Amortization can and does occur over a long period of time, even beyond the loan term.

Budget Loan – the loan payments for this are designed to cover taxes, insurance, interest and principle on the home mortgage loan. This is a convenient method of assuring your homes needs are covered. It is also possible to do the same with an escrow account.

Your Austin real estate agent will be well versed in the industry terms. With that in mind they will be able to help you to understand what applies directly to your situation and what should. Ask questions or refer back to this site for more informative data.

Commercial real estate has been as strongly affected by the real estate decline as the residential real estate markets, for some areas more so. With this in mind many commercial real estate agent have alter approaches and watched the market for the best spots to focus on. The good news is that as the residential real estate market is rebounding so is the commercial. The vast majority of the market turned to commercial leasing.

As 2008 came to a close, the numbers appeared to be more solid than previously anticipated. After reviewing the numbers across two profound years there were significant changes in sales and leases. The numbers give a lot to reflect on. Between 2006 and 2008 commercial sales dipped 13% however commercial leases increase a huge 33% over the same period of time.

This means that although real estate sales have dropped the commercial market as a whole has not been stagnate. It continued to move forward as businesses needed a place to call home. They turned to leasing and commercial real estate agents versed in lease and leasing agreements. This means that being versatile enables success both in business and real estate locations.

Over the last three years there has been sharp downswing in housing prices. In many markets the prices dropped out quickly, not stabilizing until only recently. As foreclosures rose, many didn’t believe they housing market was going to stabilize any time soon. This thankfully, has not proven to be the case. Recent reports and studies have revealed that in 2009, specifically since the second half has begun the housing market in stabilizing and reestablishing solid markets where a loss was drastic previously. Home sales are up creating the most stable market since the mortgage crisis began.

The 8 thousand dollar tax credit is being given some credit for easing the decline and initiating the incline in single family home purchases. This tax credit will expire on November 31st, 2009, this crucial deadline combined with lower interest rates have become the saviors of the housing market.

In May of 2009 the OFHEO or Office of Federal Housing Enterprise and Oversight announced the first of a steady increase in home prices, over previous months. It edged up that first month with .09% and has continued every month since. In one area of significant concern with the mortgage crisis, the pacific coast has registered one month with an increase of 2.7% showing significant improvement.

As the market continues to stabilize, buyers come out of the woodwork, and housing prices are starting to inch back up to more anticipated levels. This proves real estate and the economy as a whole has entered a state of recovery.

In real estate, as with any investment, the last thing you want to find is that you are on the wrong end of the deal that should have been equal. There are ways to avoid common pitfalls and simple misunderstandings.

The first thing to keep in mind when approaching the investment, regardless if it is a private home or otherwise, is to investigate the terms and options applicable to you. The second is to move through the investment process logically. Lastly double check what information you find against what you know and consult with your real estate agent, or representative. The agent will be able to tell you if there are better options applicable to your needs.
One common problem that homeowner encounter in the investment process is receiving the wrong information.

This can often be attributed to misunderstandings or not asking questions when something appears to be difficult to understand. It is important to make sure you are getting all of the information applicable to your situation. You do not need to sign papers that lock you into a loan with a payment schedule you do not understand, or that turns out to be the wrong form of financing for your needs. Understanding the terms and possibilities associated with your loan is important from the start. Ask questions, and consult often with your representative or lawyer.

The second common pitfall that people encounter is ‘falling in love’ with a property or area before they are aware of all of their options. This creates a sense of urgency instead of a mood of understanding and evaluation. This urgency will often cloud judgment and create an obstacle. Approach each aspect of the investment process with an open mind and rely on your real estate agent to provide you with every suitable option, before you settle on which investment you will make.

Approach this investment with ears, eyes and mind wide open and the possibilities will come. As questions with every aspect related to the investment, and you will obtain the best information. Ask the questions that sound insane to you, because those are easily misunderstood. This can be and often is a lifelong investment, so approaching it correctly the first time will provide the foundation of the future.

You can listent to a former CBS anchor and Austinite in the know… Neil Spelce. From the Neil Spelce Austin Letter….

Volume 31, Number 12

June 19, 2009

Dear Client:

One of the least-discussed aspects of getting a home loan is becoming an impediment to an efficient closing of a home sale in the Austin area between a willing seller and a willing buyer.

This scenario is being replicated daily in the Austin area: A home seller and a home buyer go through the normal negotiations and agree on a price. The home buyer is pre-approved for a loan to cover the purchase. The home is inspected and the seller and buyer once again agree to make the deal. The lender requires a 3^rd-party appraisal. All well and good, so far. But the appraisal process is turning out to be a big hitch in the closing process.

Appraisals in and of themselves are a good thing. But the process is causing real problems for Austin buyers and sellers. It ratcheted up to a new level 5/1/09, when a new national Home Valuation Code was adopted. The Code bars loan officers, mortgage brokers or real estate agents from any role in selecting appraisers for mortgages that will be owned or guaranteed by Fannie Mae and Freddie Mac

As a result, many lenders are outsourcing the selection to appraisal-management companies (that take a big slice of the appraisal fee). Some companies put appraisers under pressure to do it faster and do it cheaper. Experienced appraisers are turning down requests to pay them only 50% to 70% of their fees and may also include a requirement the appraisal be completed in as little as 48 hours.

This process has resulted in such anomalies as appraisers being hired from outside Travis County to conduct appraisals in neighborhoods they don’t know very well. The end result: less accuracy and certainty about a property’s true value.

And no one can discuss the appraisal with the appraiser under this new Code.

Anecdotally, you can find examples where some of these appraisals are challenged regularly. (No hard numbers are available) Home values differ from neighborhood to neighborhood, street-by-street. And in many cases no current comparable sales exist. This is where an appraiser who knows the area can more accurately appraise the home’s true value – more so than an appraiser from out-of-area who is charged with doing a “quick” turnaround.

This causes a number of problems, including the possibility a buyer must seek another appraisal. It is slowing sales and as the sales pace picks up, the problems may increase.

Ok. check my post previously where one of my clients got rogered… HVCC rant I hate to say it, but, “I told you so.”

joe

This message is to alert you to changes in the federal Truth-in-Lending Act regulations, which will have an impact to every mortgage provider.  It will require a fundamental change to how we finalize loan terms for the borrower prior to closing. Changes at the closing table could require the borrower to reschedule the closing date if a revised Truth-In-Lending (TIL) is needed.

The rules for the Mortgage Disclosure Improvement Act were finalized Friday, May 8^th, and it is applicable to all mortgage lenders (federally chartered or state licensed).  For applications taken as of July 30, 2009, new requirements about the delivery and the accuracy of disclosures will apply.  One of the new requirements is that the borrower must be provided with an accurate APR disclosure at least three business days prior to closing.

Remember the new rule with “3/7/3”

3 days after application – An initial Truth-In-Lending (TIL) statement must be provided no later than 3 business days after receipt of the loan application.  Our current process generates an auto-compliance package that complies with this requirement, so no changes are needed.

7 business days after initial application – Waiting period – the borrower is not permitted to close until at least seven business days have passed since the TIL was placed in the mail or provided to the borrower.

3 business days prior to closing – Waiting period – the borrower must receive an accurate APR on their TIL at least 3 business days prior to closing. If it was provided before that period of time, because the loan terms were locked in earlier in the process, no new TIL is required if there is no change to the APR or the change is less than 1/8th of a percent.

If the final loan terms cause the TIL / APR to be understated by more than 1/8th of a percent, a revised TIL with an accurate APR must be provided to the borrower so that they receive it at least three business days prior to closing. It must be in their hands at that time, and they may close on the 3rd business day after that day.

What this means to you? All Realtors and buyers need to be advised of these new timing requirements, which will limit rush closings and could even delay closings.

Thirty-year mortgage rates fell to 4.78% last Friday, hitting their lowest level since Freddie Mac started tracking rates in 1970.One-year Adjustable Rate Mortgages (ARMs) were almost the same, at 4.77%.