Austin Texas Mortgage Blog

Nicole's Week in Review

Nicole Lahti, Austin Texas Mortgage (United Lending) — Mon, 23 Nov 2009 17:07:39 -0600

Time for another edition of my week in review! Rates are near this year's lows, and are having a tough time pushing any lower. As I've mentioned in previous posts, the Fed will be slowing down the purchase of mortgage-backed securities through 1st quarter 2010; so if you're on the fence about buying or refinancing, I'd recommend moving quickly if you're payment sensitive because RATES WILL BE INCREASING.

Existing Home Sales were announced today, and jumped 10% in October! As good as that sounds, keep in mind a lot of these sales were likely due to buyers meeting the original first-time home buyer tax credit deadline (which was recently extended to June 30th).

Forecast for the Week

Its a short, but busy week! Tuesday brings our latest GDP report, and Wednesday brings the New Home Sales report and an inflation gage through the Core CPI.

If you want updates throughout the week on the above mentioned reports, FOLLOW ME ON TWITTER!

Happy Thanksgiving everyone!

Come Tour Some Trendy East Austin Homes!

Nicole Lahti, Austin Texas Mortgage (United Lending) — Fri, 13 Nov 2009 16:55:48 -0600

I'm organizing an East Austin Open House Tour this Sunday from 1:00-4:00 PM. Its specific to Area 5 in Austin, and includes trendy, affordable homes and condos.

Start at 2516 East 8th Street for your map and tour guides. Come show your support (and some GREAT homes) and stop by!

Nicole's Week in Review

Nicole Lahti, Austin Texas Mortgage (United Lending) — Mon, 09 Nov 2009 11:44:25 -0600

Rates opened up flat last Monday from the previous week. There was some upward pressure during the week with relief on Friday when the unemployment rate came in higher than expected.

190,000 jobs were lost in October, much higher than the $175,000 expected loss, putting our unemployment rate at 10.2%. Remember, this does not include people who have given-up looking for jobs, or those who are "underemployed" by taking part-time jobs, or positions in which they are over-qualified. If these people were taken into account, it's estimated that the real unemployment rate would be closer to 17.5% -- wowza!

On a lighter note...Pending Home Sales were up 6.1% for October, which is heavily attributed to first-time home buyers meeting the original tax credit deadline. Speaking of which, here is a brief of the tax credit extension signed into law by President Obama on Friday:

Tax Credit for First-Time Home buyers

FTHBs (that is, people who have not owned a home within the last three years) may be eligible for the tax credit. The credit for FTHBs is 10% of the purchase price of the home, with a maximum available credit of $8,000. Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

Tax Credit for Current Homeowners

The tax credit program now gives those who already own a residence some additional reasons to move to a new home. This incentive comes in the form of a tax credit of up to $6,500 for qualified purchasers who have owned and occupied a primary residence for a period of five consecutive years during the last eight years. Single taxpayers and married couples filing a joint return may qualify for the full tax credit amount.

What are the New Deadlines? In order to qualify for the credit, all contracts need to be in effect no later than April 30, 2010 and close no later than June 30, 2010. Those in the military do have some special extensions on the timelines available.

What's So Great About a "Tax Credit"?

The benefit of a tax credit is that it's a dollar-for-dollar benefit, rather than a "tax deduction", or reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if a first-time home buyer who qualified for the entire benefit were to owe $8,000 in income taxes and would qualify for a tax credit of $8,000, she would owe nothing. Better still, the tax credit is refundable, which means the home buyer can receive a check for the credit if he or she has little or no income tax liability. For example, if a first-time home buyer is eligible for a tax credit of $8,000 but is liable for $4,000 in income tax, she can still receive a check for the remaining $4,000!

Higher Income Caps

The amount of income someone can earn and qualify for the full amount of the credit has been increased. Single tax filers who earn up to $125,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, single filers who earn $145,000 and above are ineligible. Joint filers who earn up to $225,000 are eligible for the total credit amount. Those who earn more than this cap can receive a partial credit. However, joint filers who earn $245,000 and above are ineligible.

Maximum Purchase Price

Qualifying buyers may purchase a property with a maximum sales price of $800,000.

Forecast for the Week

There's not much economic news due out this week other than Thursday's Initial Jobless Claims Report, and Treasury auctions. With record amounts of debt being sold via Treasury auctions, its important to see how well they are received as that has a direct affect on mortgage rates.

Like my weekly review? Follow me on Twitter for semi-frequent updates on real estate and mortgage news as it comes out!

How Has the $8,000 Tax Credit Affected YOUR Sales? Take My Survey!

Nicole Lahti, Austin Texas Mortgage (United Lending) — Fri, 06 Nov 2009 15:08:21 -0600

You may've just heard that President Obama signed the extension of the $8,000 tax credit into law. There have been some other meaningful changes, including offering the tax credit to repeat buyers (up to $6,500) who have lived in their home at least 5 years, and an increase to the income limits. Rather than regurgitating the million other blog posts and articles about the extension, here's a link to an article that explains it all.

So here's my question. What is the $8,000 tax credit's true affect on sales? To date, an estimated 2 million people have taken advantage of the tax credit, but how many of these sales would have occurred even if the tax credit wasn't offered? How many of these sales perhaps just occurred sooner rather than later?

In an effort to answer this question (in a very rudimentary, non-scientific way) I've devised a QUICK 5 question survey for all my Real Estate friends out there.

Now, I'm no statistician, so please no comments on how I could've better framed questions. Please just take 2 minutes to answer a few questions on how the tax credit has affected YOUR personal sales. I'll post the results early next week.

Click Here to take survey

Thanks!

Nicole's Week in Review

Nicole Lahti, Austin Texas Mortgage (United Lending) — Mon, 02 Nov 2009 10:32:02 -0600

Happy Monday everyone! I hope you had a great Halloween weekend -- I sure did playing with the cutest 2 year olds on the planet! Here's last week's recap, and a preview of what's to come this week.

Mortgage Rates

It was another volatile week for mortgage rates, so depending on when you locked your rate, you could see a difference of about .125%. Overall, the week ended only slightly better than where it began, but depending on your lender's margins, you may/may not have seen that improvement passed on in the form of a lower interest rate. This morning's bond prices opened slightly lower than where they ended Friday, so you may see an increase of about .125% to your rate, if at all.

Last Week's News

The big news last week was 4th Quarter GDP went up 3.5%. Media outlets were buzzing with excitement saying this is a sign the recession is over. However, its important to note that Cash for Clunkers played a big role in our GDP. Some estimate once Cash for Clunkers is taken out of the equation, our GDP is closer to 1.9%.

Another big headline is the possible extension of the $8,000 first-time home buyer tax credit. The extension is not official yet, but the latest version I saw floating around would extend the $8,000 tax credit to first-time home buyers until April 2010, AND open it up to non-first-time home buyers up to $6,500 (read full details of the proposal here). The House and Senate still need to come to an agreement on the final bill, but it looks like some form of an extension will be passed.

Forecast for the Week

The Federal Open Market Committee holds a two day meeting this week with its Rate Decision and Policy Statement due out Wednesday. Friday is another big day with Initial Jobless Claims and the Jobs Report due out. Friday has the potential to have a big affect on mortgage rates as the unemployment rate will be announced (currently sitting at 9.8%) Generally speaking, bad news for the overall economy is good for mortgage rates (and visa versa). The stock market has been fueled lately by companies' higher earnings (perhaps by cost-cutting measures in the form of layoffs), and mortgage rates have risen. It will be interesting to see how mortgage rates will react to our jobless recovery.

Want to read more of my updates? Follow me on Twitter! I post real estate and mortgage news on a semi-frequent basis.

Nicole's Week in Review

Nicole Lahti, Austin Texas Mortgage (United Lending) — Mon, 26 Oct 2009 13:28:26 -0500

Mortgage rates suffered some volatility mid-week, but ended Friday about where they opened on last Monday. The same cannot be said about today, as rates opened about .125% higher than where they ended on Friday.

Last week showed the market is absorbing much of its housing inventory, which dropped to a 7.8 month supply, down from 10.1 months in April. This is in part due to builders' caution in beginning new developments -- Housing Starts and Building Permits came in below expectations last week. On the other hand, Existing Home Sales came in better than expected, with nearly 45% of homes sold to first-time home buyers!

PPI fell, however next month it could be higher as oil and natural gas prices have soured lately. Remember, high oil prices are not good for mortgage rates, and could send them higher.

Forecast for the Week

The Treasury Department will auction off nearly $123B in debt this week, which could cause some major volatility in mortgage rates this week, so hold on to your hats.

Other potential market movers this week are Wednesday's New Homes Sales, and Thursday's Initial Jobless Claims Report and GDP report. Lastly is another read on inflation with Friday's Core Personal Consumption Expenditure (PCE) Index.

Follow me on Twitter, for real-time semi-frequent updates on mortgage and real estate news!

Nicole's Week in Review

Nicole Lahti, Austin Texas Mortgage (United Lending) — Mon, 19 Oct 2009 11:22:45 -0500

Last week was another very volatile week for mortgage rates, which ended the week about .125% worse than where they began. This increase, followed by an increase in rates week before last, is an indication that rates maybe on a more permanent rise.

Why did rates increase? Firstly, the stock market did remarkably well last week; as a general rule, when the stock market does well, mortgage rates rise as money flows out of mortgage bonds and into stocks. Also, the CPI came in higher than expected last week, which indicates inflation (the archenemy of mortgage rates) may be on the horizon. And lastly, the Fed has begun to scale down its purchase of mortgage-backed securities. Its now averaging $14B a week in purchases, which is down from the $25B that its been averaging until recently.

Hate to say it, but all signs are showing rates are beginning to increase. Luckily, we are still at historic lows; however, I'd recommend moving quickly if you're seriously considering buying or refinancing a home before rates get much higher.

Forecast for the Week

This week shows no sign of relief from volatility as we have a pretty jam packed week of economic news.

We'll hear more about inflation on Tuesday with the Producer Price Index and Core Producer Price Index due out. We'll also hear more news on the housing front with Building Permits and Housing Starts on Tuesday, and Existing Home Sales on Friday. And lastly, we'll hear about unemployment with Thursday's Initial Jobless Claims Report.

All reports have the ability to move mortgage rates quickly, so if you're adverse to risk, I'd recommend locking your rate if you're happy with the payment it provides you.

If you like my commentary, you'll love working with me! Give me a call if you're interested in buying or refinancing your home!

Interested in timelier mortgage and real estate news, Follow Me On Twitter. I post market updates on a semi-frequent basis as they come out.

Will FHA Need a Bailout or Not? Who Am I Supposed to Believe?

Nicole Lahti, Austin Texas Mortgage (United Lending) — Thu, 15 Oct 2009 16:57:15 -0500

Over the last month there's been a lot of back and forth on whether the Federal Housing Administration (FHA) is the next agency to need a bailout. Both sides of the argument agree FHA's delinquencies are rising and capital reserves are falling; but disagree on whether its current and future reserves are enough to withstand these rising delinquencies. This debate has me biting my fingernails as over half of my business is FHA loans, but with compelling arguments coming from either side, who do I believe? If you're also trying to wrap your mind around what exactly is going on, here's a breakdown of what FHA skeptics contend, and FHA's defense. Who do YOU believe?

The Facts

Congress requires FHA to keep a minimum of 2% of loans insured by the agency in cash reserves
FHA has fallen below the 2% minimum. The ratio in 2008 was 3%, down from 6.4% in 2007.
FHA currently guarantees about 23% of all home loans originated, up from 2% in 2005
Approximately 20% of FHA loans originated in 2008 face serious problems including foreclosure
Roughly 7% of all FHA loans are delinquent

What FHA Skeptics are Saying

In last week's testimony before Congress, Edward Pinto, Chief Credit Officer from 1987-89 for Fannie Mae, stated its inevitable for FHA to need a taxpayer bailout within the next 24-36 months. Watch this video of him on Fox News just a couple weeks before the drop below the 2% minimum was confirmed. He makes his case as to why FHA is in such bad shape.

FHA's Defense

FHA commissioner, David Stevens, acknowledges the seriousness of falling below the 2% minimum threshold; but in his testimony before the House Financial Services subcommittee last week he stated FHA will not need a taxpayer bailout. He asserted the capital reserve fund can be replenished within the next three years according to an independent, non-governmental actuarial review of the MMI fund which is based on a conservative estimate of the housing market's future recovery. He states in the video below that this assumes no further catastrophic decline in homes prices:

In this interview Stevens asserts FHA has enough reserves to offset rising delinquencies. Although the capital reserve fund has dropped below 2%, its total reserves are as high as they've ever been.

So who do I believe? Clearly, FHA is strapped, but can it weather the storm? Its concerning to me that Stevens is betting FHA's health a "conservative" recovery in the housing market. Conservative according to who? That seems awfully subjective. The last time the mortgage industry banked on rising home prices didn't turn out too well, did it? Also, FHA's delinquency rate is roughly 7%, does that sound familiar to anyone else?

I'm not trying to be Debbie Downer, God knows if anyone hopes it all works out, its ME! I just hope FHA is prudent in its predictions and underwriting, even if that means tightening its lending standards for the overall health of our economy. Overall, I'm still on the fence on this one, although I am concerned. How about you? Do YOU think FHA will need a bailout?

House Extends Tax Credit to Active Military for One More Year

Nicole Lahti, Austin Texas Mortgage (United Lending) — Tue, 13 Oct 2009 15:52:16 -0500

Yesterday the House of Representatives unanimously voted to extend the $8,000 first-time home buyer tax credit to active military personnel, foreign service and intelligence officers. HR 3590 extends the existing tax credit to this group until November 30th, 2010. The bill now goes to the Senate, and is expected to pass with the same ease.

The bill was introduced by Rep. Charles Rangel (D-NY) because it was thought that military personel serving oversees this year did not have the same opportunity to take advantage of the tax credit. If the original qualifications are met, the extension applies to military personnel who spent at least 90 days of the current calendar year oversees. It also does not require borrowers to payback the tax credit if they are deployed after receiving it. The current tax credit requires borrowers payback the tax credit if they do not occupy the home within three years of receiving the tax credit.

No word yet on whether the $8,000 tax credit will be extended for all eligible borrowers.

Nicole's Week in Review. Plus, Where Rates are Headed!

Nicole Lahti, Austin Texas Mortgage (United Lending) — Mon, 12 Oct 2009 15:59:01 -0500

The bond market is closed today for Columbus Day, but ended last week leaving a sour taste in our mouth. Mortgage rates averaged well the entire week, then went up approximately .25% on Friday alone.

Could this mean mortgage rates are beginning to increase after enjoying months of historic lows? Perhaps, however the general sentiment is rates will continue their small fluctuations in the short-term, followed by a precipitous increase approximately 1-2 years from now. I know what you're thinking, "Nicole, why are you so smart?" Well, I largely attribute that to my early childhood Montessori education...what? That wasn't what you were thinking? You want me to define small fluctuations vs. a precipitous increase? Oh, got it.

Well, over the last 6-12 months we've experienced a very volatile mortgage rate environment. Although rates have averaged at historic lows, its normal to see small .125-25% fluctuations any given week, only to return to lower levels. On the other hand, I would define a precipitous increase in mortgage rates as a drastic and lasting increase. What will cause this precipitous increase? Inflation, or the scent of inflation coupled with the Fed's shift in monetary policy to combat it. Last week Bernanke, even how inflation would be combated if this situation occurred. Why is it estimated to take 1-2 years to begin? Inflation has kept at bay during our recession; however, as the economy begins to turn around the vast amount of liquidity pumped into the system by our government will have to be sopped-up somehow to avoid inflation. The 1-2 year time-frame stems from the fact that most believe its going to take 1-2 years for the U.S. to experience recovery (read NY Fed Chairman, William Dudley's, predictions last week).

So those are small fluctuations vs. precipitous climb for you. Now, somewhere between those two is where mortgage rates will fall by March 2010. By this date the Fed halts its purchases of mortgage-backed securities, the very thing that's brought us historically low interest rates. How high will rates get when this happens? Not sure yet, some are estimating anywhere from .25% to .50% higher, but the truth is we just don't know yet. What we do know is rates will increase by March 2010. When exactly rates increase largely depends on how the Fed weans off its purchases vs. cutting cold turkey.

Forecast for the Week

OK, now that I've taken you out about 6 months, let's rewind back to this week and see the economic news due that may affect rates. Firstly, the Fed's Open Market Committee minutes come out Wednesday which could cause some volatility depending on what is said; and the Consumer Price Index (CPI) is due out Thursday giving us a read on consumer prices. Either report will be interesting especially after Bernanke's comments last week on protecting the economy against inflation.

If you've seriously been thinking about buying a home its time to move quickly given where rates could be headed by March 2010 (and beyond). I've saved my clients thousands of dollars by closely monitoring news and reports that affect interest rates, and I'd love to do the same for you!

If you're interested in buying a home, call me first to discuss your qualification. I've love the opportunity to work with you!

How to Buy a New Home When Keeping Your Existing Home

Nicole Lahti, Austin Texas Mortgage (United Lending) — Wed, 07 Oct 2009 15:23:50 -0500

Have you tried buying a home in the last year or so only to find "moving up" isn't easy when you're keeping your existing home? This may be due to the conversion underwriting rule adopted by Fannie, Freddie and FHA. Now this rule has been in effect for a while, so most Realtors know it exists and warn buyers before they make plans to buy a new home. However, I still get a couple calls a month asking for clarification on the rule, so here's a pretty detailed explanation on how to determine whether you can buy a new home if you're keeping your existing home.

What is the conversion rule? The conversion rule applies to buyers who are obtaining financing on the purchase of a new home, and keeping their existing home. If the existing home is "converted" to a rental property, the buyer must prove the existing home has 30% equity in order to use the rental income to offset the existing home's mortgage when qualifying for the new home's financing. The equity requirement is 25% when the new home will be secured by FHA financing.

How is the equity in the existing home determined? Through a property appraisal, or county tax records.

What if the 30% equity (25% for FHA financing) cannot be proven? Then the borrower must qualify for the new home's financing by supporting both new and existing mortgage payments against their income. This can prove difficult for some borrowers.

How do I estimate the value of my existing home before ordering an appraisal? Ask your Realtor to perform a Comparative Market Analysis (CMA). This will at least give you an idea if your home is close to meeting the equity requirement. Its also important you speak with a lender (eh-hmm) to determine whether you need to use the rental income to qualify for the new mortgage. Why order an extra appraisal if not using the rental income doesn't affect your mortgage qualification?

Are there any additional asset requirements? Yes, in addition to the cash you'll need to meet the closing and reserve requirement on the new home, you'll also be required to have between 6-12 months worth of mortgage payments in reserves for your existing home.

Nicole's Week in Review

Nicole Lahti, Austin Texas Mortgage (United Lending) — Mon, 28 Sep 2009 09:58:59 -0500

Mortgage Rates

Rates ended nearly unchanged for the week, but the biggest news last week was the Fed signaled higher mortgage rates are in the near future.

The low mortgage rates we've enjoyed were due in large part to the Fed's purchase of Mortgage-Backed Securities (MBS) on the secondary market -- a 1.2T purchase commitment spread evenly over the last year. Speculation that the Fed would continue to purchase MBS was squashed last week when the Fed gave a definitive "no", and instead said their current commitment would continue through first quarter 2010 through a "weaning" off of the program.

The Fed is "weaning" the market off its purchases of MBS to gradually transition the market back to normal conditions, rather than a quick bump in rates. Regardless, its a given that the Fed's end to purchasing MBS will cause rates to increase, most likely above the 6% range.

Existing and New Home Sales

In other housing news, Existing Home Sales and New Homes Sales came in lower than expected, and inventory of existing and new homes dropped to its lowest levels since April 2007 and January 2007, respectively. This decline may be attributed to builders constructing less homes, but either way is a great sign as a drop in inventory is what is needed to begin stabilizing the housing market.

Lastly, remember the $8,000 first-time home buyer tax credit expires November 30th! If you're wanting to take advantage of this credit, you need to have a home under contract by October 15th. Get in contact with me quickly if you're interested so we can move quickly!

Forecast for the Week

This week has a full calendar of economic news due out, with Unemployment the most crucial of figures due out Friday. Currently, our national unemployment rate is sitting at 9.7%. Remember, as a general rule, weaker than expected economic data is good for mortgage rates, and visa versa.

Want real-time mortgage and real estate news throughout the week? Follow me on Twitter!

Nicole's Week in Review

Nicole Lahti, Austin Texas Mortgage (United Lending) — Mon, 31 Aug 2009 11:08:12 -0500

Last week was a very volatile week, but despite the increase in supply of treasuries mortgage rates ended slightly better than where they began. Mortgage bonds and home loan rates were pushed against a high level of technical resistance which in layman's terms means rates ended the week looking pretty good, and any additional improvement will be tougher to realize (for purely technical reasons) unless we get some pretty big market news.

There was a list of major economic reports that came out last week. Here is a recap of what was released:

1. Core Personal Consumption Expenditure (PCE) rose .2% in July. This is a good measure of inflation, and so far is showing its not a concern for the near future.

2. Personal Income rose .1% in July.

3. Disposable Personal Income fell .1% in July.

4. Personal spending rose .2% in July. This may not be an accurate depiction of personal spending as the government's Cash for Clunkers program signifantly affected this reading.

**Its interesting to note that Americans are making less money, but spending more. Hmmm...**

5. Case Shiller Home Price Index shows home prices rose 1.4% in June, the second month in a row showing an increase. However, this rise isn't enough to offset our recent declines, as year over year home prices show a decline of 15.4%

6. New Home Sales rose 9.6% in July. This reading may also be artificially higher due to buyers purchasing homes earlier than expected to take advantage of the $8,000 first-time homebuyer tax credit.

7. Second quarter GDP fell 1%. This makes four consecutive quarters of contraction since the Great Depression.

Forecast for the Week

Its a shortened holiday week, but there still are some reports that may/may not help mortgage rates push through the upper layer of technical resistance which could further improve rates, or not.

Wednesday minutes from the last FOMC meeting with be released; its important to see if inflation concerns are addressed as this could cause a rise in mortgage rates. However, all signs show inflation isn't a concern for the near future, but that doesn't mean it won't be at some point.

Thursday brings our Initial Jobless Claims report. The recent trend of higher than expected Claims is disappointing after what appeared to be a steady decline in claims earlier this summer. On Thursday the Treasury will also announce the amount of its borrowing for next week, which will definitely bring some movement in the market then.

And lastly, Friday the Labor Department will announce the Jobs Report for August. July's report showed glimmers of hope for an improving job market: 247,000 jobs lost in July versus economists' expectations of 328,000 jobs lost, the smallest loss since August 2008. Even better, the Unemployment Rate dropped to 9.4%, from the prior month's reading of 9.5%, which broke a streak of 9 straight monthly increases. It will be important to see if these trends continue.

Want realtime mortgage and real estate news throughout the week? Follow me on Twitter!

Nicole's Week in Review

Nicole Lahti, Austin Texas Mortgage (United Lending) — Mon, 17 Aug 2009 15:15:46 -0500

It was a pretty volatile week for mortgage rates, but overall they ended about .25% better than where they began. This was mainly due to a friendly read on inflation via the Consumer Price Index report (CPI). This figure was unchanged for July, but the year-over-year CPI fell 2.1% for July, the largest 12-month decline since 1950. This continues to bode well for mortgage rates, but may not always be the case as CPI figures will likely rise as our economy pulls itself out of this recession.

Some more good news last week was Freddie Mac's announcement of a $768 million profit for 2nd quarter 2009. Now this is mainly due to a one-time accounting adjustment and mark-to-market gains that we'll likely not see again, BUT at least Freddie doesn't have to ask for any federal handouts this quarter. This is pretty good news after Moody's ominous prediction that Fannie and Freddie will likely be "wound down" by the federal government within the next 18 months and replaced with similar entities.

Forecast for the Week

Some potential market movers this week are Tuesday's Producer Price Index report (PPI) which gives us a reading on wholesale price changes; as well as Tuesday's Housing Starts report and Friday's Existing Home Sales report. Thursday also brings the Philadelphia Fed Report and the Initial Jobless Claims report. The Jobless Claims report will be interesting as we've seen a recent reduction in initial claims for the last three weeks.

I'll update you next Monday with how this week goes overall, but for up to the minute alerts on this week's reports and mortgage rates, follow me on Twitter!

How to Access the First Time Homebuyer Tax Credit BEFORE Closing

Nicole Lahti, Austin Texas Mortgage (United Lending) — Thu, 13 Aug 2009 17:20:00 -0500

The $8,000 first time homebuyer tax credit has been a big help to homebuyers this year. Although I don't recommend buying a home because of the tax credit, I think its a good idea to put the gas on your purchase if you've seriously been contemplating a home purchase independent of the tax credit. The last day you can buy a home (i.e., keys in your hand, not just putting a contract on a home) is November 30th . Assuming it takes 30-45 days to close on the mortgage financing, you need to have a property under contract by mid-October, which means you need to begin your search like, NOW!

You can actually amend your 2008 tax returns after you purchase your home to receive the $8,000 tax credit quickly after closing, assuming you meet all the criteria to qualify. However, if accessing the tax credit after closing puts you in a Catch 22 because you need the funds to purchase the home, here's a solution for you: a 90-Day Down Payment Assitance Loan.

This program is intended to allow the consumer take advantage of recent legislation by receiving a short term loan prior to filing for and receiving the federal first time homebuyer tax credit.

I've included additional details on the program to the right.

If you have any additional questions on the 90-Day Down Payment Assistance Program, don't hesitate to call me. I can answer your questions, as well as prequalify you for the program and a mortgage.

How MDIA and HVCC will Impact Your Closing Date

Nicole Lahti, Austin Texas Mortgage (United Lending) — Fri, 07 Aug 2009 10:22:32 -0500

If you're in Real Estate and have a pulse, you've experienced, or at least heard of, the frustrations caused by the HVCC process. Well, just as you started getting used to dealing with HVCC's inefficiencies, along comes MDIA (Mortgage Disclosure Improvement Act, also referred to as HERA), HVCC's slower, meaner sister.

Ok, so before you start drowning in an alphabet soup of government legislation, let's quickly breakdown the legislations' rules, and their impact on the real estate market.

HVCC, Home Valuation Code of Conduct (effective May 1, 2009):

Promotes the accuracy of appraisals by shielding appraisers from undue influence and ensuring consumers have sufficient notice of appraisal content by requiring consumers receive a copy of their appraisal report no less than 3 days prior to the closing of their loan, absent a consumer waiver of this requirement.

Impacts

Although this legislation is great in theory, its stringent (an in my opinion irrational) rules makes implementation is inefficient at best. HVCC has caused significant delays in closings, and kills sales altogether by not offering a reasonable dispute process for correcting inaccurate appraisals.

MDIA, Mortgage Disclosure Improvement Act (effective July 30, 2009):

Amends the Truth in lending Act (TILA) implemented through Regulation Z by changing the requirements surrounding disclosures to consumers and addresses the timing of when fees can be charged.

MDIA is also referred to as HERA (Housing and Economic Recovery Act), as MDIA amends HERA which was passed in 2008.

Impacts

Another piece of legislation that is great in theory, but will negatively impact the real estate market as inefficiencies in the process are worked out. Until these are corrected, the real estate market will experience significant delays in closings, increasing the cost to consumers through longer ratelock periods and/or lock extension costs.

The good thing is consumers will benefit from greater transparency once inefficiencies in the process are corrected. Until then, hold on because its going to be a bumpy ride.

Four Key Elements of MDIA and HVCC

1. If the consumer is financing the property, these new regulatory and investor guidelines will impact--and could even dictate--the closing date. Historically, consumers and sellers would agree on a closing date, and then service providers--including lenders--would work as best they could toward meeting that date. Going forward, contracts can still be written with a specific closing date in mind, but all parties need to take into account that the earliest any home financing transaction can close is 7 business days after the consumer is issued his or her initial mortgage disclosures from the lender.

(Note: Saturdays, with the exception of federal holidays, do count as a business day for the purpose of disclosures only)

I don't see this rule causing too many delays as nearly all financing transactions require an appraisal. Although possible, its not very likely to receive the appraisal and provide it to borrower 3 days before closing (HVCC rule), all within the first 7days of providing disclosures.

2. Upfront fees cannot be collected by the lender (except for credit report fees) until the initial disclosures (most importantly, initial TIL) are received by the consumer.

Upfront fees include appraisal fees, and most lenders won't order the appraisal until they've received upfront payment/deposit from the borrower for the appraisal. Not ordering the appraisal immediately can cause delays in the underwriting and closing process.

The tricky part here is when the borrower is considered to have received the disclosures. Some lenders allow the initial disclosures to be emailed, and therefore, considered received immediately. Other lenders, require the loan be submitted to their investor, who then mails the initial disclosures to the borrower. If disclosures are mailed, they are considered received by the borrower on the 3rd day after mailing. Therefore, its important to ask your lender how disclosures and appraisals will be delivered to the borrower -- email or snailmail, as the answer can significantly impact your closing date (more on this in Email vs. Mail Delivery below).

3. The consumer must be provided a copy of their appraisal at least 3 days before closing. The consumer must receive the appraisal at least 3 business days prior to the mortgage closing. If the consumer believes the 3-business-day required review period is not necessary for whatever reason, he or she has the right to waive that requirement in writing.

This is an HVCC requirement, and to date I have not experienced any significant delays meeting this requirement. Delays may be experienced if an appraisal is mailed vs. emailed; in that case, a borrower is considered to have received the appraisal 3 days after mailing, and then HVCC requires a 3 day review period before they can close.

4. An increase of more than .125% in the Annual Percentage Rate (APR) from the initial Truth in Lending disclosure (TIL) requires the TIL revised and redisclosed to the consumer. The consumer must receive a revised TIL at least 3 business days before closing. A more typical contract date may be 30-45 days. Considering that many things can be changed or finalized throughout the course of the transaction, there are a number of changes that can impact the borrower's APR. Therefore, it is critical on the front end to ensure estimated fees are as accurate as possible.

Ok, this is the BIGGIE. Prior to MDIA, most lenders accurately disclosed their fees, and provided a "good faith estimate" of other third party fees. A good lender always came in close. This is no longer possible with MDIA as a hairline change in 3rd party fees could increase the APR more than .125%. If this occurs (which could be discovered right before closing), the TIL must be redisclosed, and the closing delayed at least 3 business days. Therefore, its very important buyers choose a lender before an offer is made, so the lender can collect 3rd party fees and provide an accurate TIL ASAP.

The tricky part again is when the borrower is considered to have received the redisclosed TIL. This all depends on whether the redisclosed TIL is mailed or emailed. If it is mailed, add an extra 3 day mail wait to the 3 day review period, which means your closing can be delayed 6 more days! Ouch.

Mail vs. Email Delivery

As mentioned above, whether the initial/redisclosed TIL and/or appraisal is delivered to the borrower via mail or email has a significant impact on the closing of the loan. If an email system is utilized, the borrower is considered to have received the documents immediately, and the 3 day required review period can begin. However, if a mail system is used, the 3 day review period doesn't begin until 3 days after the documents were mailed. Whether a mail or email delivery system is used depends on which investor the lender utilizes for the loan.

Currently, many investors allow for an email delivery system, however, there are many that utilize a mail system. The general trend for investors utilizing mail delivery systems is to switch to email, but until then expect delays in closings. Remember, its a learning curve for everyone. To help you visualize how MDIA and HVCC will affect a typical closing see the slides below. I've included a few calendars to help illustrate various scenarios you may encounter, including email vs. mail delivery system, and how redisclosing the TIL affects the closing date.

What you can do to make adjusting to MDIA less painful

1. Choose your lender prior to making an offer. More than ever, there are many moving parts and timelines to adhere to during the underwriting process. Therefore, you need your lender communicating with all parties involved early-on to ensure a smooth and timely closing.

Choose an experienced, competent lender prior to making an offer, and understand the consequences of switching lenders. A new lender must provide a new TIL, meaning the wait requirement periods start from the beginning, and will delay your closing.

2. Negotiate which title company you'll use quickly. Buyers and sellers choose which title company to use during the negotiation process. Real estate agents should negotiate this first, so the lender can contact the title company for their fees to begin computing the initial TIL. The sooner the initial TIL is completed and sent to the borrower, the sooner you can close. They key is to facilitate communication between the lender and title company ASAP.

How to negotiate to use your Title Company? If a buyer wants to use their title company, pull for them by letting the seller know the lender already has their fees, which means the initial TIL is almost complete (subject to the final sales price), and can be sent to the borrower sooner (i.e., close sooner). If a seller wants to use their title company, pull for them by providing the title company's list of fees and endorsements with the Seller's Disclosure.

3. Allow for a 30-45 day closing. This timeline may decrease as the industry adjusts to the new process, but minimize stress by allowing for ample closing time.

4. Lock the interest rate and fees upfront. The best way to expedite the close is to lock in the rate and fees as soon as possible. If the borrower chooses to "float" the interest rate, a TIL may need to be redisclosed when the rate is locked if the rate and fees differ from the initial TIL provided. Redisclosure automatically adds at least 3 days to your closing date.

5. Understand the MDIA and HVCC process, and the learning curve

These are new processes for everyone involved in the transaction, and the best thing you can do is understand the legislation so you can be a team player. There's nothing worse than someone who hasn't taken time to learn the new way of doing business, then blaming everyone else when things take longer than they expected.

What you can do to make adjusting to HVCC less painful

1. Choose your lender prior to making an offer. Doing so allows your appraisal to be ordered quicker. Also, understand changing lenders may require you to purchase a new appraisal as some lenders don't allow you to transfer the appraisal you ordered through another lender.

2. Understand which comps appraisers are using. Appraisers use comps underwriters prefer, and currently underwriters are placing more weight on comps within the last 90 days AND pending comps. You may/may not agree with what that does to your value, but understanding this better prepares you for what may be a lower appraised value.

3. Discuss a contingency plan with buyer & seller. What happens if the appraisal comes in lower than the sales price? Try to figure out worse case scenario, and how the buyer and seller can restructure the price (or not) if it does. Don't be sideswiped by a low appraisal if you can help it.

MDIA and HVCC Timing Impacts

View more presentations from Nicole Lahti.

Nicole's Week in Review

Nicole Lahti, Austin Texas Mortgage (United Lending) — Mon, 13 Jul 2009 17:16:17 -0500

Mortgage Rates

Last week started off looking pretty uneventful with a slim economic calendar, but got busier mid-week when some pretty big market moving news was announced. This news caused an improvement in rates early in the week, and a worsening later in the week.

So what caused all the volatility last week? Well, the week started off with some pretty sluggish reports in the Stock market, which improved the Bond market and mortgage rates. Adding to the mortgage rate improvement was Wednesday’s successful Treasury note auction. However, Thursday’s Treasury note auction did not go as well, causing downward pressure on Bonds, and a climb in mortgage rates. Rates improved slightly on Friday, but not enough to make up for Thursday’s losses. Overall, the week ended worse than where it began, but better than where the previous week ended.

Unemployment

Thursday’s big news was that 565,000 people filed for initial unemployment claims, which was better than expected and at the lowest level since January. However, that still means 565,000 people are applying for unemployment benefits for the first time, which really isn’t that great of news. This puts the number of Americans receiving unemployment benefits at 6.88 million, which is nearly double than what it was at this time last year.

Forecast for the Week

This week may amount to a fairly volatile week for mortgage rates. Tuesday and Wednesday bring Producer Price Index and Consumer Price Index reports, respectively. The Fed will also release its minutes from the Federal Open Market Committee meeting on Wednesday. All three releases will give us a good gage on inflation (and deflation), and where the economy is headed overall. Adding to this week’s major reports is earnings season in the stock market, with reports due out from the financial sector. It’ll be interesting to see how the financials have been weathering our economic storm lately.

Rates are up overall since we began our precipitous climb in mortgage rates about two months ago. However, we are currently sitting on the lower range of shorterm rates. Therefore, if you're considering buying or refinancing, right now is a good time before rates go back up.

Nicole's Week in Review

Nicole Lahti, Austin Texas Mortgage (United Lending) — Mon, 29 Jun 2009 11:02:54 -0500

Last week was a relatively calmer week in terms of volatility in mortgage rates. This came as a surprise as we expected to see some pretty big swings on Thursday following the Fed's latest Federal Open Market Committee (FOMC) meeting. Minutes released from the FOMC meeting indicate the Fed decided on no change to the Fed Funds rate, or to the Bond purchase program (which helps keep mortgage rates low). One change from the prior meeting's statement was the Fed no longer sees deflation as a risk, which could signal inflation down the road. Remember, inflation is the arch-enemy of mortgage rates, so even the slightest scent of a possibility of inflation will cause an upward movement in mortgage rates.

Want some more good news from last week? Americans are savings more! Our personal savings rate rose to its highest level since December 1993, which is great considering we had a negative savings rate only a few years ago!

Mortgage Rates

Mortgage rates ended about .25 better than where they began the week. According to Bankrate.com, average 30-year conventional mortgage rates are 5.46%. This improvement comes on the heels of a good Treasury auction. If I were looking for a mortgage, I'd lock in now because this is definitely one of the better rates since they began to inch upward over a month ago.

Forecast for the Week

Two potentially big market movers this week are Tuesday's Consumer Confidence Report which will indicate how Americans are feeling about the economy, perhaps signaling an increase in spending; and Thursday's June Job's Report.

Remember, as a general rule, weaker than expected economic data is positive for mortgage rates, and visa versa.

Nicole's Week in Review

Nicole Lahti, Austin Texas Mortgage (United Lending) — Mon, 15 Jun 2009 13:17:56 -0500

Volatility continues to be the name of the game when it comes to mortgage rates as they continue their precipitous climb that began roughly three weeks ago.

Mortgage Rates

Home loan rates ended last week about .25% worse than where they began. According to Bankrate.com, average 30-yr fixed conventional mortgages averaged about 5.67% nationwide, up .22% from last week.

Contributing to last week's volatility was the increase in supply of mortgage-backed securities (MBS) on the secondary market -- a large supply of MBS drives their prices down, causing mortgage rates to increase. Some of this supply is the large number of refinances that have closed and are now MBS on the secondary market.

In months past, the Fed has gobbled up MBS to keep mortgage rates low; however, it has not made this move lately causing mortgage rates to increase.

How to Compare Quotes When Rates are Volatile

On average, mortgage professionals are receiving three re-prices a day; therefore, when comparing rate quotes make sure to get quotes at roughly the same time to more accurately compare apples to apples.

Its also important to know the difference between a rate quote and a rate lock. Until your mortgage professional has confirmed your rate is locked for "X" amount of time, you've only received a rate quote, and can be subject to market fluctuations.

Forecast for the Week

Tuesday and Wednesday have potential to bring some big swings to mortgage rates, as both days report inflation on the wholesale and retail level. Tuesday we'll hear about inflation on the wholesale level with the Producer Price Index (PPI) Report; and Wednesday we'll hear about inflation on the retail level with the Consumer Price Index (CPI) Report. Remember, inflation is the arch-enemy of mortgage rates -- the market doesn't have to be experiencing actual inflation for rates to increase, even the slightest scent of possible inflation will move mortgage rates.

Nicole's Week in Review

Nicole Lahti, Austin Texas Mortgage (United Lending) — Mon, 08 Jun 2009 08:20:12 -0500

If you haven't noticed, I took a long hiatus from blogging -- BAD BLOGGER! Ya, I know what you're thinking, "Just another blogger that gets going then fizzles out -- chalk this one up to just another statistic." Well, sort of, these last two months mortgage rates have consistently averaged in the mid to high 4.0's%, which has brought an onslaught of business that left me gasping for air at the end of the day. Hey, I'm not complaining, it was a nice run; a good portion of the business was rate driven refinances which will likely slowdown as mortgage rates have suffered a presipitious climb these last two weeks.

You've been living under a rock if you haven't heard about mortgage rate's recent increase. As a mortgage professional, its been tough to keep up -- these last two weeks have averaged three rate changes a day, and sometimes four! I've begun telling clients that rate quotes are good for the minute I quote them, because the market is so volatile, and I could get a re-price for the worse (or better) at any minute. Therefore, let your mortgage professional know quickly when you're putting an offer on a home, or ready to refinance, so your rate is locked in quickly.

Mortgage Rates

Rates ended last week about .375% to .5% worse than where they began. According to Bankrate.com, a conventional 30-yr fixed rate purchase is averaging about 5.45% nationwide. Much of this change was due to Friday's Jobs Report; although, the report showed the U.S. continues to loose jobs, less jobs were lost than expected -- 345,000 jobs lost in May, vs. 520,000 expectation, taking our unemployment rate to 9.4% from 8.9%. This caused a rally in the stock market, which sent money flowing out of bonds and into stocks, causing mortgage rates to rise.

Where are rates headed?

According to a panel of mortgage professionals on Bankrate.com, rates are headed higher with slightly over 1/3 of the panel giving this prediction. I tend to agree -- over the shortrun we may see some downward movement in rates; however, over the longrun, rates will rise. Our large government deficits, and monetization of debt will eventually lead to inflation (the arch-enemy of mortgage rates), its just a matter of when and how successful the government will be in combating it. Even the slightest scent of inflation will increase mortgage rates.

Should you lock or float your rate?

Whether or not rates will increase or decrease in the shortrun is difficult to predict, as our turbulent times are causing some major volatility. I recommend calculating your monthly payment at current rates, and locking your rate if it yields you a monthly payment within your budget. If the rate increase has taken the monthly payment on your home out of your budget, then wait to see if rates drop AND begin looking at other house options within your budget in case rates don't fall.

Forecast for the Week

On Thursday, we'll hear Retail Sales numbers which will have a direct affect on the stock market, this will cause money to flow in or out of bonds, causing rates to fall or rise, respectively. Remember, as a general rule weaker than expectedd economic data is good for mortgage rates, while positive data causes rates to rise.

Do Builder Incentives Discourage Competition? HUD Wants Your Opinion...

Nicole Lahti, Austin Texas Mortgage (United Lending) — Thu, 02 Apr 2009 14:38:06 -0500

HUD has succumbed to pressure on its recent ruling against home builders who make incentives contingent upon using their mortgage companies.

Last November, it ruled these builder incentives violated RESPA's required use provision. This provision states affiliated businesses are exempt from the "required use" provision as long as they offer a combination of settlement services at a total price lower than the sum of the market price of the individual services, and if the discount is not made up by higher costs elsewhere in the settlement process.

HUD asserted it had proof of many cases where builder incentives violated the required use provision because they resulted in higher mortgage rates, fees and sales prices for homebuyers. The National Association of Home Builders (NAHB) immediately filed a 90-day injunction postponing the implementation of this ruling to from January to April, and now another 90-day injunction has been filed extending implementation of this ruling to July while HUD seeks public opinion on whether it should withdraw its new definition.

However, a joint motion issued by HUD and NAHB seems to indicate the ruling has been withdrawn altogether in an effort to start over. HUD then issued a notice stating everyone from homebuyers to industry professionals would be better served by a new rule-making proceeding that ensures consumers are best served by builders' affiliated business arrangements. This new rule-making proceeding would allow the public the opportunity to comment on the issue of "required use", so HUD can then make a decision based on the commentary.

OK, so there's the background on this issue; here's my opinion and that of others who disagree with me. In my last post on this topic, I argued in favor of a crackdown on how builder incentives are only offered through chosen mortgage companies. Refer to my previous post for an explanation on how builders' affiliated business arrangements with mortgage companies discourage competition AND many times lead to higher costs for the consumer.

Not all builders' affiliated business arrangements result in higher costs to the buyer, but I've experienced many cases in which they have. Here's an example from a Good Faith Estimate sent to me by a Realtor who thought the rate and fees charged by the builder's mortgage and title company were high. In this case, in order for the builder to offer certain incentives, the buyer had to use the builder's mortgage company and title company. Compare the builder's mortgage and title company fees to market fees (defined as what I and the title company I use would've charged), and you'll clearly see how the builder's incentives cost this consumer more in fees.

Market Mortgage and Title Company Fees

Mortgage fees = $3,465.29

Title fees = $541.82

Builder's Mortgage and Title Company Fees

Mortgage fees = $4,233 ($766.70 higher than market)

Title fees =$829 ($287.18 higher)

*Title fees do not include Owner's Title Policy, which the buyer also paid for

Builder's incentives actually cost this borrower $1,053.88 more in fees

One argument in favor of builders' affiliated business arrangements is the sales builders loose when "outside" mortgage companies drop the ball. This is avoided by using their own mortgage company because they know and trust them. This is a fair argument; however, I would argue builders' salespeople need to scrutinize the lender the buyer wishes to use before accepting the contract. Salespeople are smart, qualified real estate professionals, and should know the right questions to ask the borrower's lender to ensure they are qualified to close the loan. Additionally, the buyer's lender needs to do their job to make sure the builder feels confident in their ability to close the loan, this includes (1) an upfront conversation with the builder with an anticipated time-line (2) addressing and providing solutions to any/all known issues, and (3) frequent status updates throughout the underwriting process.

For those who believe builders' affiliated business arrangements are worth the streamlined closing process and/or incentives, I encourage you to present your buyers with a quote of what an "outside" mortgage and/or title company would charge them. If the builder's companies are more expensive, leave it to the consumer to decide if the streamlined process and/or incentives are worth the higher fees.

If the buyer decides the extra fees are worth it, then great, you've at least done your job of educating the consumer, and promoting transparency.

I argue builder incentives themselves are not anti-consumer, but making them available only through certain companies is anti-consumer as it discourages competition. If a builder wants to offer incentives, they should be able to; but they should be made available through any mortgage or title company the buyer wishes to use (including the builder's). This spurs healthy competition, resulting in more transparency and lower costs to the buyer.

Whether you agree with me or not, I encourage you to make your opinion known by submitting your comments to HUD. Click the attached notice for directions on how to submit your comments.

Nicole's Week in Review

Nicole Lahti, Austin Texas Mortgage (United Lending) — Mon, 30 Mar 2009 14:12:49 -0500

Last week provided some good news on the economic front, relative to what we've seen lately. The U.S. Personal Savings Rate came in at 4.2% -- the highest we've seen in decades! This is great news, especially considering we had a negative savings rate not too long ago (see chart).

It also looks like the Treasury is FINALLY using TARP funds to buy toxic assets -- well, that's a novel idea (eh-hmm). Treasury Secretary, Timothy Geitner, announced last week the Treasury would team-up with private investors to buy toxic assets off banks' books. The Treasury will provide private investors billions of dollars of low-interest loans to buy the toxic assets, and the FDIC will guaranty the debt.

Lastly, Existing Home Sales for February exceeded expectations increasing 5.1% over January, but decreased 4.6% vs. last year.

Mortgage Rates

Rates moved around quite a bit last week, but ended close to where they began -- near historic lows. According to Bankrate.com, 30-yr fixed conventional mortgages averaged at 5.19%, down .10 from the previous week.

I locked rates for clients in the 4.0%'s last week, so if you're thinking about lowering your mortgage payment by refinancing call me first to make sure it makes financial sense for you. If buying a home is on your radar, read my post Thinking About Buying a Home? Consider This First... for tips on what to consider before making a move.

Forecast for the Week

On Thursday we should hear the FASB's ruling on whether to modify Mark-to-Market accounting standards. As I've discussed in a previous post, Mark-to-Market accounting is what escalates the weakening of banks as the value of the assets on their books drops.

The Labor Department will also announce their Jobs Report for March. Last week's Initial Jobless Claims showed the number of people collecting state unemployment benefits jumped to a record high (seasonally adjusted 5.56 million), which doesn't bode well for this week's Jobs Report.

Thinking About Buying a Home? Consider This First...

Nicole Lahti, Austin Texas Mortgage (United Lending) — Wed, 25 Mar 2009 10:07:54 -0500

Washington is doing its very best to give you “warm ‘n fuzzies” when it comes to buying a home right now – from historically low interest rates, to literally giving you money when you buy a home. Has it worked? I think so as there has been a recent uptick in activity. So is it time to jump in and buy while the “gettin’ is good”? Perhaps, but if I were thinking about buying a home right now, here are a few things I’d consider first.

1. Mortgage rates will rise.

Mortgage rates are at historic lows, but this won’t last long. Rates have dropped considerably as the government gobbles up mortgage-backed securities and injects capital into Fannie Mae and Freddie Mac. This has caused a sharp increase in the money supply, and a weakening of the dollar, and although we don’t feel it now, inflation will become a threat, and inflation is mortgage rates arch-enemy.

Even if Bernanke can succeed at keeping inflation at bay once it arrives, I believe mortgage rates will still increase in reaction to even the slightest hint of inflation. So what does this mean for you? Jump on the home-buying train? Perhaps, but a few more considerations first.

2. Home values aren’t dropping in all areas.

Low post 9/11 interest rates and easy mortgage qualification made everyone a homeowner and sky-rocketed home prices. The good news? Although not totally immune from the housing bubble, Texas home prices didn’t surge as dramatically as other parts of the country, so we shouldn’t see as steep of a decline (see figure below from the Dallas Federal Reserve). As for Austin, sales of single-family homes have dropped 36% in February 2009 (compared to February 2008), but the median home price is holding strong at a 6.1% increase.*

However, it’s still good practice to scrutinize the sales price of the home to protect yourself against any over-valuation, and hopefully hedge against any future value drops IF they occur. Recent comparables are used to establish the sales price of your home, but all it takes is one over-valued house to sell to raise the sales price of your home.

Therefore, look at sales over a longer time horizon to make sure your house is experiencing healthy appreciation, and not just a quick jump. Your Realtor has access to all this data; therefore, choosing a Realtor you trust to properly analyze the market is extremely important.

3. What if you buy a home and home values STILL fall?

First off, remember current low rates provide you a much lower payment than normal, even if the price is higher today. Look at the Austin-area statistics below. Although the single-family home median sales price for February 2009 is 13% higher than February 2006, lower 2009 interest rates make the principal and interest payment equal to a home purchased in 2006.

Feb. 2009

Single-family home median sales price: $193,848*

Average 30 year conventional mortgage rate: 5.13%**

Principal & interest payment ($193,848 with 20% down): $844.86

Feb. 2006

Single-family home median sales price: $171,600*

Average 30 year conventional mortgage rate: 6.25%**

Principal & interest payment ($171,600 with 20% down): $845.26

However, if you’re worried about “taking a bath” on your home when you sell, ask yourself how long you plan to stay in your home. See what your mortgage balance would be on that future date (your Loan Officer can provide this), then add reasonable fees associated with selling your home to your future mortgage balance (your Realtor can provide this). This is what you need to sell your home for in the future to break-even. Discuss with your Realtor whether you believe selling the home for the break-even amount in the future is possible.

I know, this negates any tax benefits you may enjoy, but let’s keep it simple for illustrative purposes.

4. Make sure you’re financially prepared to buy a home.

Examine your personal financial situation to determine if it’s a good time for you to buy a home. Most importantly, make sure you have a few months of living expenses in savings AFTER incurring the cost of buying a home. An emergency fund, especially as a homeowner during these turbulent times, is vitally important.

Also, consider the total cost of moving (i.e., movers, cleaning, appliances, etc). and make sure you can pay this in cash – now is not the time to go into credit card debt to buy your home. Lastly, make sure your mortgage payment is a reasonable percentage of your income. There are plenty of opinions on what is considered “reasonable”, but in my opinion 30% is a healthy number.

*Multiple Listing Service, via Jason Aleem, Broker/Owner of Greylux Group

** www.federalreserve.gov

Nicole's Week in Review

Nicole Lahti, Austin Texas Mortgage (United Lending) — Mon, 16 Mar 2009 22:25:28 -0500

Last week's big news was the rally stocks enjoyed -- the largest in 2009. Wall Street certainly liked hearing Citigroup state it wouldn't need anymore capital injections, and Bernanke stating our recession could be over by end-of-year if the banking system can be stabilized. He also made it abundantly clear that major institutions would not be allowed to fail.

The consequences of our recessionary spending loomed its ugly head again as China expressed its concern over the safety of the U.S. assets it holds. Bernanke has attempted to quell these inflationary fears by stating the U.S. has an "exit strategy" for preventing inflation by retracting the money supply in a timely manner.

Why should you care about inflation? Well, other than the fact that it raises prices of everything you buy, it also is the arch-enemy of mortgage rates -- when inflation increases, so do mortgage rates -- and fast.

Mark-to-Market accounting was also discussed in Washington as Securities and Exchange Commission's (SEC) Chief Accountant, the Financial Accounting Standards Board's (FASB) Chairman and the Deputy Comptroller for Regulatory Policy in the Treasury Department testified in front of the House Financial Services committee.

Market-to-Market was created to bring more transparency into business, but has escalated the depths of the financial crisis. Expect some sort of change to Mark-to-Market accounting principles as Congress urged the SEC and FASB to present a solution to repair the Market-to-Market situation within three weeks. This change could help stabilize the banks.

Mortgage Rates

Despite stocks' big rally, mortgage rates ended the week only slightly better than where they began. According to Bankrate.com, conforming 30-year mortgage rates averaged 5.37% last week (5.41% the previous week).

Forecast for the Week

Potential big market movers this week come on Wednesday as the Fed delivers its policy statement and rate decision. Tuesday and Wednesday's, Producer Price Index (PPI) and Consumer Price Index (CPI) will also be of particular importance as it measures US inflation (or deflation). These reports are especially interesting after China's recent concern over future U.S. inflation.

Remember: Weaker than expected economic reports are generally good for mortgage rates, and visa versa.

So You're Being Evicted because Your Landlord Foreclosed--Now What?

Nicole Lahti, Austin Texas Mortgage (United Lending) — Thu, 12 Mar 2009 12:41:49 -0500

As foreclosure rates sky-rocket, the victims oftentimes lost in the shuffle are renters of foreclosed properties who get the boot after their home is foreclosed upon. Standard practice is to send an eviction letter via certified mail to the tenant giving them 30 days to evict the property once the foreclosure is finalized. Unfortunately, many tenants are not notified of the eviction until after the foreclosure, giving them only a few weeks to find a new home.

If finding and moving into a home in a few weeks isn't inconvenient enough, many tenants also loose their security deposit. In managing my own rentals, I had a couple prospective tenants contact me anxiously looking for a new home with limited funds for security deposit/first month's rent because (1) they didn't have time to save up for moving expenses on such short notice, and (2) they lost their previous security deposit to their landlord who went M.I.A..

What Do You Do if This Happens to You?

Here are two options:

1. Continue to rent the home

If your home's mortgage is owned by Fannie Mae or Freddie Mac, you may continue to rent from them on a month-to-month basis after the foreclosure is finalized. Rent will be based on market rent, and you'll give them the right to show the home to prospective buyers as it will be on the market for sale while you live there. Making your home available for showing is obviously inconvenient, but this option will give you time to find a new place.

How do you know if Fannie or Freddie own your mortgage? Immediately get in contact with Fannie or Freddie see if they own your mortgage when you're contacted about eviction/foreclosure proceedings. If you confirm this, ask to speak with an Eviction Specialist who will give you your rights as a tenant, and your options once the foreclosure is finalized, including renting the home from Fannie or Freddie.

It's at this point you decide how to handle paying rent to your landlord until the foreclosure is finalized. The Eviction Specialist will not advise you on this issue, but keep in mind many tenants have continued to pay rent to their landlords who kept their security deposits after the foreclosure is finalized. I'm not saying skip-out on rent, but be proactive in finding out what your landlord is doing with your money.

2. Utilize Fannie or Freddie's Cash-for-Keys Program

Another option is to be compensated for leaving the property by the eviction date and in good condition. This option can also be discussed with an Eviction Specialist, and the amount Fannie or Freddie compensate you is negotiable. It's important you (1) prepare a list of reasonable moving expenses beforehand to help in negotiations, and (2) get the final compensation amount in writing.

Reasonable moving expenses include:

A security deposit and first / last month's rent
Movers
Utility deposits
Temporary living quarters such as motel

What if Fannie or Freddie Don't Own the Mortgage?

Many other investors are offering these sort of arrangements to tenants as well. Contact the attorney on the notice of foreclosure or eviction letter you receive and ask for the investor's contact information to discuss your options.

You Need to be Proactive

Although you have rights as a tenant, unfortunately they are oftentimes lost in the foreclosure shuffle. Therefore, the easiest way to handle this unfortunate situation is to be proactive in finding out your rights and contacting the right people quickly about your options.