Ki's Austin Real Estate Blog

Mortgage Lenders Bailed Out By the U.S. Government

Ki Gray - Austin Real Estate — Sat, 28 Nov 2009 06:10:15 -0600

Beginning October 2008 through October 2009, the U.S. Treasury Department has been bailing out U.S. banks. In efforts to undergird the economy, and stabilize the struggling institutions, over $200 billion has been paid out to over 600 mortgage lenders through the Treasury's Capital Purchase Program.

Surprisingly, almost $71 billion has been paid back to the U.S. Treasury so far. That's almost 36 percent of $200 billion being paid back by 41 different banks. Interestingly to note, almost 7 percent of the banks who borrowed federal money owed 36 percent of the government's capital purchase.

Looking at the extensive list of all lenders included can make your head spin. Names like 1st Enterprise Bank, 1st FS Corp. and 1st Source Corporation start off the registry that progresses to a multitude of variations of Bancorp names, ending on Yadkin Valley Financial Corporation, York Traditions Bank and Zion Bancorporation.

The Freeport State Bank of Harper, Kansas received the lowest bailout in the amount of $301,000. It looks like CitiGroup Inc. and JP Morgan Chase & Co. of New York, along with Wells Fargo & Co. based in California, received the largest bailouts in the amount of $25 billion each. Out of the three lenders receiving the biggest bailouts, only JP Morgan Chase & Co. is noted as having paid anything back to the government. To the credit of JP Morgan Chase & Co., the group has repaid the entirety of the $25 billion borrowed.

Not surprisingly, lenders in New York State lead U.S. territory and states in the Union with $79.5 billion in bailout bucks. The ten states that top the list are:

1. New York State - $79.5 billion
2. North Carolina - $28.6
3. California - $27.6 billion
4. Pennsylvania - $9.4 billion
5. Ohio - $7.65 billion
6. Minnesota - $7 billion
7. Georgia - $6.2 billion
8. Illinois - $4.5 billion
9. Virginia - $4.2 billion
10. Connecticut - $3.8 billion

States in which lenders borrowed the least include the following bottom ten:

1. Washington, D.C. - $6 million
2. Wyoming (all in Buffalo) - $8.1 million
3. Rhode Island - $31 million
4. New Hampshire - $40.8 million
5. New Mexico - $45.5 million
6. Nebraska - $51.6 million
7. Maine - $58.4 million
8. Idaho - $81.7 million
9. Arizona - $83 million
10. North Dakota - $85.8 million

The following states and companies are in the top ten to have paid back bailout money in the amounts indicated:
1. New York State -- $51.7 billion
-- JP Morgan Chase & Co. - $25 billion
-- Goldman Sachs Group Inc. - $10 billion
-- Morgan Stanley - $10 billion
-- American Express Company - $3.4 billion
-- First Niagara Financial Group - $184 million
-- Signature Bank - $120 million
-- Alliance Financial Corporation - $27 million
-- Bank of New York Melon Corp. - $3 billion
2. Minnesota - $7 billion
-- U.S. Bancorp - $6.6 billion
-- TCF Financial Corp. - $361 million
3. Virginia - $3.7 billion
-- Capital One Financial Corp. - $3.55 billion
-- First Community Bank Shares - $41.5 million
4. North Carolina - $3.15 billion
-- BB&T Corp. - $3.13 billion
-- Crescent Financial Corporation - $24.9 million
5. Massachusetts - $2.1 billion
-- State Street Corp. - $2 billion
-- Independent Bank Corp. - $78 million
-- Berkshire Hills Bancorp Inc. - $40 million
6. Illinois - $1.6 billion
-- Northern Trust Corp. - $1.6 billion
7. New Jersey - $397 million
-- Valley National Bancorp - $300 million
-- Sun Bancorp, Inc. - $89.3 million
-- Somerset Hills Bancorp - $7.4 million
8. California - $248 million
v CVB Financial Corp. - $130 million
-- Westamerica Bancorporation - $83.7 million
-- Bank of Marin Bancorp - $28 million
-- First ULB Corp. - $4.9 million
-- Manhattan Bancorp - $1.7 million
9. Washington - $200 million
-- Washington Federal Inc. - $200 million
10. Texas - $200 million
-- Sterling Bancshares, Inc. - $125 million
-- Texas Capital Banchshares, Inc. - $75 million

Don't let the numbers fool you. Just because a bank borrowed little doesn't necessarily mean that it is a strong institution. On the contrary, it could be a smaller bank with shallower pockets. That should be even more cause for concern if the bank has not yet repaid borrowed bailout money to the government.

On the other hand, it should be encouraging if your bank is one of the lenders who landed in the top ten list of those who repaid their debt to the government. Also encouraging is that the $150 billion government bailout of the 1980s for the savings and loan debacle served the U.S. economy well. If history repeats itself, this will set the banks on track to overcome the current U.S. economic challenges.

Ki graduated from UT, and stayed in Austin to live and work. He authored a website, which serves Austin real estate buyers. It has a feature, which includes free searches of properties in the Austin MLS. His site also has statistical information on Austin real estate and a graph which shows mortgage rate history.

A Financial Check-up

Ki Gray - Austin Real Estate — Sat, 28 Nov 2009 06:05:05 -0600

Whether by choice or circumstance, people are finding they have more time and more need to ponder finances these days. Very few people are making their way out of this recession completely unscathed and most are trying to be a little wiser about money in the process. In these times of layoffs and pay cuts, giving yourself a financial check-up is a good way to save money and perhaps change some bad habits.

Accounts
Take a look at all of your accounts, starting with the savings account. Either through past paper statements or online, take some time to check balances, interest rates and make a savings goal. If the savings account is near empty, make a goal to save $1000 over the next six months, or perhaps start a new monthly savings goal, say $150 a month. Many financial counselors recommend having as much as six-months' worth of expenses saved. Job uncertainty is high these days and having a just-in-case cushion is not a bad idea.

Whatever the amount in a savings account or individual savings goals, it's important to check interest rates. New York Times financial columnist Ron Lieber recommends looking into Internet savings account that offers better-than-average interest rates. Compare interest rates at banks and other savings sites. If the savings goal is very long term, then money should be put into a different kind of account with a higher rate of return (although there are usually penalties for withdrawals, so make sure the money is not needed in the short term).

Next, take a look at checking and other accounts to assess the fees. Banks can charge different fees for different types of accounts, as well as penalty fees for overdrafts or ATM withdrawals. If the fees seem excessive, talk to someone at the bank about how to restructure the accounts to avoid fees. The same goes with credit card fees and interest rates. Be sure to read the fine print and make payments on time to avoid fees, which can add up very quickly.

Another way to get your accounts to work for you are cash-back credit cards and bank savings plans like keep-the-change. Doing some web research will garner all kinds of offers for credit cards with perks. Start with the companies of the cards in your wallet and see what kind of cash back incentive programs they have. Also, banks offer ways to bolster your savings by automatically depositing the "change" from any debit card transaction into a savings account.

Insurance
An important part of the overall financial health picture is insurance coverage. Look at the deductibles on all forms of insurance coverage: car, homeowners, health, etc. Consider how the insurance was used in the last year, i.e. did you have a car accident or hospitalization. If insurance coverage is used minimally, consider raising deductibles and lowering monthly payments. Also, check into good-driver discounts and other ways to get a better deal, which are usually not offered unless asked for.

Will
If you haven't written a will, especially if children are involved, get one done. Start by pricing lawyers and getting recommendations from friends. It is a relatively easy process and could save headaches and heartaches down the line. Also consider putting in advance directives for future major health decisions.

Gift cards
The last part of your financial check up is fun. Spending gift cards is one of those things that people mean to do and then forget. The cards sit around, sometimes losing value, and more often than not accidentally get tossed out. Take some time to find the cards and then go have some fun spending them.

Ki turned his Austin real estate hobby into a business. He maintains a website with a Austin MLS search. Potential buyers can investigate what is available in the Austin real estate market for free and keep up with market trends on his real estate blog.

Steps for Avoiding Foreclosure

Ki Gray - Austin Real Estate — Sat, 28 Nov 2009 05:58:05 -0600

If you're struggling with your finances and don't know what your options are, you're going to feel helpless in your situation. Here are some tips and tricks to avoid bankruptcy, and options that are available to help you resolve your outstanding mortgage.

The best advice you can ever get regarding your mortgage is that your highest priority in paying bills is to pay your mortgage first. That's hard advice to follow, though, because you can't live without utilities or food. It becomes even more complicated when you need to buy gas to look for a job or get to work to make money to pay for your bills. A mortgage often takes a backseat to these kinds of expenses.

You do need to scrutinize your spending while working on your mortgage payments. Have a family meeting to gain a consensus that everyone will pitch in and help save money. Identify areas of spending in which you can save. Oftentimes, there are areas you can cut back that you just never thought of.

For instance, rent movies from a local Redbox that only cost $1 per night, or rent from online sources like Nexflix or Blockbuster for a nominal monthly fee. They all can be found online. Instead of dinner and movie night outs for your family, have a dinner theme night at home, along with watching a rented movie. These are just a few strategies that can help you save lots of money.

At the onset of struggles to pay your mortgage, contact your lender. Talk to your lender about your situation. Maybe you've experienced a job loss or medical emergency - two of the most predominant reasons people end up in foreclosure. Discuss your situation with your lender, find out what they are willing to do. Most often, lenders don't tell you what your options are. Instead, they require you to complete a workout packet that includes providing a hardship letter, submit it for consideration and then wait.

If you are waiting on a response from your lender, don't let your mortgage fall into default. Understand the laws of your state in regards to foreclosure. Find out the timeframes of when certain notices need to be filed, and take action if your lender is taking its time in responding to you.

In regards to mortgage rescue companies. Proceed with caution. Many have fallen prey to mortgage rescue scams. You don't want to be one of them. Do everything you can yourself. You don't need to hire a mortgage company to assist you. You can do everything that a mortgage rescue company would do for you, anyway.

Contact HUD and find a foreclosure avoidance counselor in your area. Visit the HUD website for specific phone numbers and assistance. Find out what options might be available to you. You could also access the Making Home Affordable website at makinghomeaffordable.gov. The direct phone number is (888) 995-HOPE. They will refer you to a counselor that can assist you. Make sure you ask lots of questions.

Don't hesitate to enlist the assistance of a bankruptcy attorney if your situation becomes serious enough that you will lose your home. Many have lost their homes waiting for a lender to respond to their inquiries regarding forbearance, reinstatement, repayment, a modification loan or some kind of restructuring.

If you do have to hire a bankruptcy attorney, then you need to know that it won't be cheap. The average cost to hire an attorney for a Chapter 13 Bankruptcy is $2,500. It is expensive to go into chapter 13 and save your home. If you make enough income to keep your home through a bankruptcy, and you've built up significant equity in your home, it would be worth it to go through a bankruptcy in order to save it.

Your final option in avoiding foreclosure is a short sale. If you find that your home is not worth what you owe on it and you don't have much equity built up in it, then it may benefit you in the long-run to sell your home in a short-sale. It is especially advantageous if you are only in default and have not yet gone into foreclosure with your lender. It is often not that complex or drawn out, either.

The decision is up to you on how you avoid foreclosure. Take all the precautions available to you to mitigate foreclosure and do whatever you can to keep it if it's worth it to you. If not, do what you can to get it sold in a short-sale. Nowadays, lenders are much more likely to agree to one.

Ki works, and lives, in Central Austin. He built a website, which includes a free search for Austin Texas real estate. Future homeowners can search available homes in the Austin MLS. He also has a blog which tracks Austin real estate with statistics and news updates.

Mortgage Rates Hit Historic Low

Ki Gray - Austin Real Estate — Sat, 28 Nov 2009 05:28:33 -0600

Mortgage rates fell this week with three of the 4 major mortgage products hitting all time lows. The most important of the four mortgage products the 30 year rate fell to 4.78 from 4.83 equaling the previous low. The 15 year mortgage product hit 4.29 beating the previous low of 4.32 reached last week. The 5 year arm came in at 4.18 breaking the previous low of 4.25 also reached last week. The 1 year arm stayed at 4.35. Below are rates from the weeks from Oct 29, 2009 to Nov 26, 2009

Nov 26, 2009
30-yr 4.78 15-yr 4.29 5-yr ARM 4.18 1-yr ARM 4.35

Nov 19, 2009
30-yr 4.83 15-yr 4.32 5-yr ARM 4.25 1-yr ARM 4.35

Nov 12, 2009
30-yr 4.91 15-yr 4.36 5-yr ARM 4.29 1-yr ARM 4.46

Nov 05, 2009
30-yr 4.98 15-yr 4.40 5-yr ARM 4.35 1-yr ARM 4.47

Oct 29, 2009
30-yr 5.03 15-yr 4.46 5-yr ARM 4.42 1-yr ARM 4.57

Jul 30, 2009
30-yr 5.25 15-yr 4.69 5-yr ARM 4.75 1-yr ARM 4.80

What's interesting is that we keep waiting for mortgage rates to increase. Some have any speculated that rates could move into double digits in the next two years. But while this discussion has been occurring mortgage rates have continued to drop and reach historical lows. In addition to rates it's interesting to look at actual mortgage payments. We took today's rates and translated them into a payment on a 200k. We also did the same thing with rates from November 12th (2 weeks ago) and July 30th, 2009 (4 months ago).

Nov 26
30-yr $1046.91
15-yr $1508.6
5-yr ARM $975.7
1-yr ARM $995.62

Nov 12
30-yr $1062.66
15-yr $1515.71
5-yr ARM $988.56
1-yr ARM $1008.62

Jul 30
30-yr $1104.4
15-yr $1549.47
5-yr ARM $1043.29
1-yr ARM $1049.33

The payment is 5.5 percent less than what it was 6 months ago or 57.49 less a month for a 200k loan.

So what is going to happen moving forward? I have been predicting for the last several weeks that mortgage rates were going to eventually move up and they have continued to move down. But I am going to continue with the same prediction. In the short term rates might move down slightly. But in the long term there is more of a risk of mortgage rates moving up drastically. With mortgage rates sitting at historical lows there is more of a chance of rates moving up a point or two than moving down a point or two.

Although 5 year arms are at historical lows it makes more sense to look at the 30 year rate. Locking in at all time lows is simply too appealing to pass up.

In Austin, Ki organizes information on Austin Texas real estate. He writes frequently about mortgage rates. His site has multiple mortgage widgets and a mortgage calculator widget.

Mortgage Lenders under Government Scrutiny

Ki Gray - Austin Real Estate — Mon, 23 Nov 2009 01:24:45 -0600

Topping the list of institutions under fire are the familiar faces of Fannie Mae and Freddie Mac, the poster children for good intentions gone bad. The government entities faced renewed federal scrutiny earlier this year. What to do with the troubled HUD groups, however, is still up in the air. The issue is delayed until after the current federal bank restructuring effort is completed, which is anticipated by year-end.

Reformation is definitely on the horizon for these two lenders. The Treasury Department is considering an expansion of options on guidelines officials released in June regarding both lenders. Privatization, nationalism, hybrid strategies are all being measured for reform.

Fannie and Freddie were taken into conservatorship by the federal government last year as the financial crisis spread. Governmental control seemed inevitable. If the two were to collapse, it was thought that the damage would be irreparable and more widespread and devastating than even the Lehman Brothers' failure.

Reform is critical, since these entities provide the majority of home loans in the U.S. The U.S. Treasury Department was authorized to purchase Fannie and Freddie mortgage securities through the end of this year. Legislation is anticipated to extend the Treasury's conservatorship through the end of 2010.

Wells Fargo, the receiver of $25 billion in bank bailout money, was the primary lender on two recently shuttered businesses in Alabama. Wadley company Plantation Patterns and Anniston corporation Anniston Sportswear both filed for bankruptcy, and Wells Fargo was the primary lender for both companies. According to federal statistics and a local mayor's report, a total of more than 660 jobs were lost in both closings. Birmingham-based Meadowcraft is the parent company of Plantation Patterns. Chicago-based Hartmax Corporation is the parent company of Anniston Sportswear.
Wells Fargo's apparent refusal to work with either business brought federal scrutiny. In two separate incidents, the lender was named by over 40 members of Congress in complaints written to Treasury Secretary Timothy Geithner.

Not unfamiliar to federal scrutiny, Countrywide came under the federal microscope again last year, this time by a federal bankruptcy court official. Accused of destroying, losing or misplacing $515,000 in checks issued by homeowners, the home lender was further accused of adding inappropriate charges to the bankruptcy debt of homeowners.

Countrywide eventually worked out a deal with the court; however, the Justice Department challenged the settlement due to some unsavory terms presented by the mortgage lender. A non-disparaging clause was included, which caused the judge in the case to approve a probe of Countrywide's entire systems by the U.S. trustee.

Many mortgage lenders letting loans for reverse mortgages are now being examined under federal scrutiny. Some lenders responsible for predatory lending have now turned to high-pressure tactics and broad-yield premiums intended to rip off elderly homeowners. Michael S. Blume, U.S. Attorney, noted a dramatic increase in reverse mortgage loan numbers.

Bank of America and Wells Fargo, along with insurers like MetLife and Genworth, heavily invest in reverse mortgages worth about $17 billion annually. The FHA insures most reverse mortgages. Lenders are approved by HUD. Borrowers are required to meet with HUD-approved counselors prior to being approved for the reverse mortgage loan. New certification requirements have resulted in a reduction of counselors available nationwide, alongside an increase in the number of reverse mortgage loans.

The similarities of subprime loans to reverse mortgages are eerily similar in their predatory lending practices. Senior homeowners are strongly encouraged to avoid high-pressure sales that involve add-on products and services for reverse mortgages.

For more mortgage lenders under federal scrutiny, check out the Federal Trade Commission website at FTC.gov. You'll find formal complaints and current cases being prosecuted by the federal government.

Ki developed a website to serve Austin real estate investors. The site lets people search for homes and condos in the Austin MLS. His site has information on historical mortgage rates along with general information on Austin real estate.

Stimulating the Economic Numbers

Ki Gray - Austin Real Estate — Mon, 23 Nov 2009 01:18:19 -0600

Statistics can be tricky. It all depends on who is doing the math and for what purpose. The latest report on how many jobs can be attributed to the workings of the stimulus package is a perfect case in point. The Obama Administration came out at the end of October with the announcement that the stimulus package has created 650,000 jobs.

To give the government credit, it didn't just pull that number out of a hat. The Recovery, Accountability, and Transparency Board (RATB) is an independent entity that has tracked the money being spent for the Recovery Act. Every dollar being spent can be seen in an array of charts and information on the Recovery.gov website.

According to the White House website, $340 billion of the stimulus money has been committed to infrastructure projects, small business loans, unemployment benefits, state fiscal relief, tax cuts and etc. The administration says all this spending has saved or created one million jobs. The catch is that not all the entities that have received government funds are required to report job information to the RATB. The jobs saved claim can be a particularly tricky one to pin down. Much of those numbers are attributed to teachers and healthcare workers that didn't have to be let go.

The 650,000 jobs created also don't include what is considered indirect jobs. "...those created when the directly hired contractor orders some cement, the school teacher orders classroom supplies, or when both of them spend their paychecks in the economy, generating more economic activity and jobs than would have occurred if they were unemployed," said Jared Bernstein, chief economist to Joe Biden.

The Obama administration says that only about half the stimulus money that was dedicated to job creation has been spent and they are still on track to create or save 3.5 million jobs by the end of next year. Even then, the White House admits, that will not completely offset the number of jobs lost during the recession.

While the president's math may be overly optimistic, it's based on hard numbers and has been tracked with relentless transparency. What is a little fuzzier is the Republicans argument about what those jobs created through the stimulus package is costing the American taxpayers.

According to the Associated Press, some Republican lawmakers who are critical of President Obama's stimulus package are dividing the stimulus money spent so far by the estimated number of jobs saved or created. That kind of equation makes it look like each job saved cost the taxpayers over $246,000.

Here is why that statistic is misleading. First, the AP points out that each job is more than just the worker. It is also the materials and supplies needed to do the job, as well as the actual output of the job. So, the money funds the construction worker, the supplies as well as a portion of the bridge repaired, for example.

Also, that number is based on jobs produced to date and doesn't take into account that these jobs have the potential to last for years. Some of the jobs created thus far will also create other jobs, like hiring one engineer to design a product will produce more jobs down the line. As mentioned before, lots of indirect jobs created and saved aren't included in the 650,000 jobs. The effectiveness of the stimulus package may be debatable and statistics can be confusing, but they shouldn't be misleading.

Ki created a website to provide a free search for Austin homes for sale. This is a service for potential buyers of Austin real estate. His site also provides market updates on his Austin real estate blog. Ki has lived in Austin, Texas for the last ten years.

Investing in Real Estate Overseas

Ki Gray - Austin Real Estate — Mon, 23 Nov 2009 01:09:50 -0600

How do you find the best deals and safely invest overseas? There are lots of opportunities to choose from, since many countries in the world are opening up their markets to foreign investors.

In order to invest safely, however, you'll want to be cautious, plan carefully and understand the particulars that go along with purchasing property overseas, like taxes and financial laws specific to the country. It is strongly advised that you use an overseas user to look over any investment you make overseas.

Before deciding on a country in which to buy property, take into consideration the areas that are available. Don't limit yourself to the first country that comes to mind. The Middle East and places in Eastern Europe are becoming more open to foreign investors.

Real estate prices fluctuate, so you can sometimes find a bargain in an unexpected place. With all the flux in world economies today, home values can change in a matter of days.

You've heard the expression that real estate is all about location, location, location. This is even more critical when investing overseas. Become familiar with the country and area in which you are interested in buying real estate. Know its economy and political climate. You don't want to invest in property in a volatile nation or in property that will devalue as soon as you pay for it.

Keep in mind what aesthetics are important to you in regards to the location of the property. Decide if you will be renting the property out and what needs renters would have. Is it located near a beach, airport or shopping mall? If buying it for yourself, is it property that you would be comfortable living in long-term?

Once you've decided on a location, you'll want to find property that meets your needs. Take a trip and spend a few days in the area, so that you can do research locally. Check out newspaper ads for local property or for sale signs in front of homes in the area. International publications are also a good resource for listings, along with ads online.

If the task seems too daunting, you may want to use an overseas property consultant. There are serious issues you'll want to be aware of that you may not be able to ascertain yourself. You'll need to know if it has a duplicate title or if there are claims on the property. There are so many processes that are unique to certain countries that you may not be aware of or find out about. From helping you find property to obtain financing for it, an overseas property consultant can provide the advantage of guiding you through every step of the process.

When obtaining financing, make sure you research all the possibilities. There are numerous options for financing available. Find out which one is best for you. You may fair better by working with a local lender there if the country in which you want to invest is open to foreign investment. Sometimes overseas lenders can provide better advantages than a local bank. In addition, you may want to inquire of international mortgage lenders or brokers, since they may be able to assist you in finding the best financing available.

Many people have successfully invested in overseas properties and some have even made their millions from it. Just proceed with caution and become informed. Your success may hinge on what you know.

Ki works as a real estate broker in Austin, Texas. He maintains a website to search Austin Texas real estate. The site offers free and exhaustive information on the Austin market along with a search for homes in the Austin MLS. It also provides a blog with statistical information on Austin real estate

Mortgage Rates Plummet: 6th Lowest of All Time

Ki Gray - Austin Real Estate — Mon, 23 Nov 2009 01:04:06 -0600

Rates fell for the third straight week. They hit the lowest point since May 21st and they reached the 6th lowest point in history. It will come as no shock to those that have been following rates that the 5 lower rates all occurred this year. Below are the 6 lowest rates of all time.

April 30th - 4.78
April 2nd - 4.78
April 23rd - 4.80
April 16th - 4.82
May 21st - 4.82
Nov 19th - 4.83

As we can see although it's the 6th lowest it's extremely close to the all time low of 4.78 reached in April. Falling below 4.78 at this point would be significant though. While it would not make a big difference in actual mortgage payments it would create headlines. And having a bunch of stories about historically low mortgage rates could push some buyers off the fence and help increase sales.

In addition to the 30 year rate falling the other major mortgage products fell as well this week. In fact the 15 year mortgage and the 5 year arm both hit all time lows this week. Below are rates from the weeks from Oct 22, 2009 to Nov 19, 2009. We also showed rates from April 30th, 2009 which was the all time low for the 30 year mortgage.

Nov 19, 2009
30-yr 4.83 15-yr 4.32 5-yr ARM 4.25 1-yr ARM 4.35

Nov 12, 2009
30-yr 4.91 15-yr 4.36 5-yr ARM 4.29 1-yr ARM 4.46

Nov 05, 2009
30-yr 4.98 15-yr 4.40 5-yr ARM 4.35 1-yr ARM 4.47

Oct 29, 2009
30-yr 5.03 15-yr 4.46 5-yr ARM 4.42 1-yr ARM 4.57

Oct 22, 2009
30-yr 5.00 15-yr 4.43 5-yr ARM 4.40 1-yr ARM 4.54

Apr 30, 2009
30-yr 4.78 15-yr 4.48 5-yr ARM 4.80 1-yr ARM 4.77

So now that we have locked at rates lets look at actual mortgage payments. We took current rates and translated them into a mortgage payment for a 200k mortgage. We also did the same thing with rates from November 19th (2 weeks ago) and from April 30, 2009 (the all time low for the 30 year rate.

Nov 19
30-yr $1052.96
15-yr $1511.65
5-yr ARM $983.87
1-yr ARM $995.62

Nov 05
30-yr $1071.19
15-yr $1519.78
5-yr ARM $995.62
1-yr ARM $1009.8

Apr 30
30-yr $1046.91
15-yr $1527.94
5-yr ARM $1049.33
1-yr ARM $1045.7

So based on current mortgage rates the payment on a 200k loan would be $1052.96. What's interesting is that the payment is 1.7% less than what it was two weeks ago. On the other hand the payment based on today's rates is only 0.5% higher than what it was on April 30th when the 30 year rate hit its all time low.

So what is advice to people looking for mortgage? Although the 5 year arm is at an all time low I would avoid ARM's at this point. Looking at historical mortgage rates it would seem that most likely rates will be significantly higher in 5 years than what we are seeing currently.

Now is probably a going time to lock in a mortgage rate. With rates just barely above all time lows the chances of rates falling drastically is pretty low. On the other hand rates have a lot more room to move up.

Ki works in Central Austin. His website distributes free information on Austin Tx real estate to potential buyers. His site also has a free mortgage calculator and a interest rate widget.

Preparing to Buy a Home

Ki Gray - Austin Real Estate — Mon, 16 Nov 2009 01:06:54 -0600

Are you preparing to buy a home for the first time? Or have you closed on a number of homes in the past and are preparing to buy your next home? Regardless, you'll want to keep in mind the steps necessary to successfully navigate the preparations for buying that next home.

Initially, you'll want to determine your income, debts and savings and decide what you can afford. Instead of doing all the calculations and attempting to make the determinations yourself, you may want to decide on a reputable lender and have them do it for you through a prequalification. If you know that you will not be accumulating any further debt, the prequalification will tell you how much you will be able to loan for your next home.

A word to the wise, however, is that you may want to consider buying a home that is 10 percent less than what you are prequalified for. It will give you more wiggle room for future unforeseen purchases.

Finding a lender is easy. They can be located throughout the Internet, in the Yellow Pages, at mortgage brokerages and in banking and financial institutions. Finding a good lender, though, may not be as easy.

You'll want to find a reputable lender who can give you the best deal and you'll want to find a loan that meets your needs, preferably one that has a low interest rate and relatively low monthly payments.

If you've used a lender to buy a home in the past that you trust, you may want to start there. For a broader selection of lenders, however, comb through the Internet for sites that display the Better Business Bureau (BBB) or other accreditations. Also, talk to friends and family about lenders they have successfully used in the past. You might want to consider a mortgage broker over a banking institution. They have a access to a variety of lenders who offer a variety of options.

Pick ten lenders total to inquire about a home loan. Ask about different loans available and which ones might work best for you. Depending on your buying situation and the number of years you intend on owning the home, you may want to consider an adjustable rate mortgage (ARM) or balloon loan with a refinancing option as opposed to a traditional fixed-rate mortgage.

When you decide on the loan type, get a quote for interest rates, APRs and all fees associated with the loan from each lender, and request that they send the quotes to you in writing. Make sure when you request the interest rate that you ask how long the rate is good for (through what date).

Try to obtain all this information within a week's time, so that interest rates don't fluctuate too much. They actually can from day-to-day, depending on trading market activity.

Once you find a lender and know how much you will be able to loan, you'll need to find a home to buy. You probably already have in mind what you want in your next home. A licensed realtor, however, has access to a variety of resources to enable you to most successfully find your next dream home.

Inquire of friends and family in order to find a reputable realtor. If no one knows of one, look in the local phone book and pick out three different realty companies to contact. You'll want to either ask for the realtor with the most closings or for the realtor who has just been licensed.

Many people suggest that you use the realtor with the most closings, because they experience the highest rate of success in sales. New agents, however, can be just as valuable, since they are hungry for a sale and will often go beyond the call of duty, even beyond that of those who are very experienced, in order to sell your home.

Use your intuition in deciding on realtors to interview in person. Put together a short questionnaire that you ask of each when you initially speak to them over the phone. You'll want to ask each of them for two references of people who have used them in the past.

Some questions you might want to ask of experienced realtors in your phone interview are:

* How many homes have you listed versus how many you have sold in my subdivision, neighborhood or city (whichever are applicable) in the last year, or the past (whichever is most relevant)?
* What types of advertising do you use to promote the sale of homes you list - multiple listing service (MLS), flyers in tubes at the curb of the home, newspaper advertising or other media outlets, agent open houses, public open house, etc.?
* How many homes do you have listed currently on the market in my subdivision, neighborhood or city?
* Do you have any marketing materials?
* Do you have any additional accreditations? If so, which ones?
* Will you be my only point of contact or do you have others who would be assisting me through the process?
* What commission do you charge? Some can vary as much as 2 percent.

Questions for new realtors may be as follows:

* What did you do as a profession before you became a licensed realtor?
* How did you approach your previous profession in order to be a success?
* What will your plan be to sell my home?
* What types of advertising will you use to promote the sale of my home - multiple listing service (MLS), flyers in tubes at the curb of the home, newspaper advertising, agent open houses, public open house, etc.?
* How are you building your reputation as a new realtor?
* Do you have any marketing materials you can provide to me?
* Do you have any additional accreditations? Is so, which ones?
* Will you be my only point of contact or do you have others who would be assisting me through the process?
* What commission do you charge? Some can vary as much as 2 percent.

Some of the items you request over the initial phone interview may have to be provided when you meet face-to-face. For the in-person meeting, however, you'll want to include the following questions:

* Do you update your clients regularly regardless of whether there is new information to provide? If so, at what regular intervals?
* What is your marketing strategy to sell my home?

You may think of other questions that are pertinent to your situation. Jot them down before the interview and don't finalize the interview until all your questions have been answered.

After the interviews are completed, compare commission and responses of each. Decide on which licensed realtor you'll use, and you'll be well on your way to obtaining your next home purchase.

Ki maintains a website, which works as a clearinghouse of information on Austin real estate. There, future homeowners can search the Austin MLS. Ki has worked with Austin buyers for over three years. He also provides up to date information on mortgage rate trends on his site.

The Ripple Effect of Foreclosure

Ki Gray - Austin Real Estate — Mon, 16 Nov 2009 01:01:46 -0600

Having the bank seize your home is nobody's idea of a good time. A word that was hardly part of the American vernacular two years ago, foreclosure is all too common these days. While the number of homes in some state of foreclosure is decreasing each month, the fact is that foreclosures across the country are up 19 percent from a year ago (RealtyTrac).

According to the Associated Press, one in every 385 homes received some sort of foreclosure-related notice in October. Foreclosure is a multi-step process that often begins with the loss of a job, includes several stages and can end with ruined credit. Banks repossessed over 77,000 homes last month, dramatically changing the lives of hundreds of thousands of people. What is harder to quantify is the ripple effect foreclosures have in not only devastating a single family, but also affecting an entire community.

A homeowner not only loses the house, but also all the money put into the house. The homeowner walks away from all the equity and any money spent on improvements. The tax liability and bad credit can linger for years after a foreclosure. Families can be uprooted and long-standing social ties can be broken. Emotions can run high and a person's self-esteem and sense of well being can be battered.

Then there is what can be called the "spillover effects" of foreclosure. Beyond the homeowner who lost a home, the property values of surrounding homes can be negatively affected. In the broader view, this can affect the local property tax base, which has far reaching implications for an entire city. Because the foreclosure can be drawn out, homes often remain empty for months. Empty or abandoned homes can fall into disrepair and even invite crime.

These are unusual times with the country still reeling from the Great Recession and perhaps unusual steps are needed to keep more struggling homeowners out of foreclosure. Both the Federal Reserve and the Treasury Department have enacted programs to get lenders to work with homeowners. Programs offering mediation before a bank can seize a property have helped in states like Nevada, where the foreclosure rate is the highest in the nation. (AP)

The recent decline in foreclosures is largely attributed to these measures by the government to encourage banks to work with homeowners before foreclosing. However, those efforts are only a drop in the bucket. The AP reported that about 650,000 borrowers, or 20 percent of those eligible, were taking part in temporary trial plans. The reality is that since the beginning of September, only about 1,700 loan modifications had been made permanent.

It's been reported that lenders are making efforts to delay foreclosure as they evaluate which borrowers might qualify for the government's loan modification program. Also, housing prices have started to climb again after three years of startling declines. This helps reduce the number of homeowners who owe more than their home is worth. As foreclosures remain at a crisis level, affecting a wide range of people, the Obama administration may need to push more lenders to take part in loan modification plans--for all our sakes.

Ki enjoys sharing his passion for Austin Texas real estate with future homebuyers. One way he distributes information in through his website, which offers a free search Austin MLS search. He lives and works in Austin, Texas. And writes on his blog about Austin real estate.

Crazy Weather from Coast to Coast

Ki Gray - Austin Real Estate — Mon, 16 Nov 2009 00:56:29 -0600

After an exceptionally hot, dry summer, the rain has finally come to Central Texas. Just how much rain will it take to alleviate the current drought conditions? Considering this is the worst drought Central Texas has experienced since the 1950s, the answer to that is difficult to quantify. Don't expect any let up in the current water restrictions.

According to the Lower Colorado River Authority, year to date the area rainfall is 8 to 12 inches below normal. However, this is the second year of lower than normal rainfall, making it closer to 16 to 20 inches below normal. There are five levels of drought, and a good portion of Travis County has been at the highest "exceptional" level for many months.

According to the Associated Press, drought conditions in Central Texas are improving, especially as the rain keeps coming. Williamson and Burnet Counties, and even parts of northern Travis County are now considered to be in a moderate drought. However, the southern half of Travis County and all of Hays County are now considered to be in a severe drought, upgraded from exceptional drought. Just in the last year of this two year drought, it is estimated that the drought has caused more than $3.6 billion in crop and livestock losses.

What isn't changing significantly, even with all the recent rain, are the lake levels. The National Weather Service says it will take "several periods of sustained heavy, soaking rains to begin refilling lakes Buchanan and Travis." While that kind of rainfall gets the lake levels and local water supplies back to where they are supposed to be, it brings other consequences as well. Just ask Atlanta what it's like to go from drought conditions to catastrophic flooding.

From the drought in Texas to the floods in Georgia, it's difficult these days to find a part of the country not experiencing some kind of unusual weather. According to the National Weather Service, September saw above-average temperatures for most of the country. That is hardly the case in October, as Colorado to Minnesota are seeing early snow. There is more heavy rain forecasted in the south, something places like Atlanta doesn't need. California has gone from wildfires to the danger of mudslides as that state braces for storms. And, then there is a heat wave in Florida.

Much of this crazy weather from coast to coast can be attributed to the climate phenomenon known as El Niño, which affects weather patterns around the globe. According to the National Oceanic and Atmospheric Administration, we are in the midst of an El Niño pattern that will have both a positive and negative impact for the next several months. On the positive side, the hurricane season has been milder and the dry southwest will get some much needed rain. "El Niño's negative impacts have included damaging winter storms in California and increased storminess across the southern United States." Starting to sound familiar, isn't it?

Ki graduated from college in Austin, and couldn't leave. He created a website to provide information on the Austin real estate market to future buyers. Anyone can search for homes in the Austin MLS on his site. His site also provides a search for Austin commercial real estate.

Mortgage Rates Continue to Fall

Ki Gray - Austin Real Estate — Mon, 16 Nov 2009 00:51:39 -0600

While the expectation has been that mortgage rates would start to rise they have fallen for the last 2 weeks. This week the 30 year rate fell from 4.98 to 4.91 (last week it fell from 5.03 to 4.98). Besides October 8th its the lowest rate we have seen since the start of the summer. So how does 4.91 fit in with historical mortgage rates. Its lower than any point before March 26, 2009. Its also the 11th lowest recorded rate in history (all of the 10 lower recorded rates occured in 2009).

While the 30 year mortgage rate is the most watched rate the other 3 major mortgage products fell as well. The 15 year rate fell from 4.40 to 4.36. The 5 and 1 year arm fell from 4.35 to 4.29 and 4.47 to 4.46. The 1 year arm is now higher than the 5 year arm and the 15 year arm. Below are rates from the weeks from Nov 12th, 2009 to October 15th, 2009.

Nov 12, 2009
30-yr 4.91 15-yr 4.36 5-yr ARM 4.29 1-yr ARM 4.46

Nov 05, 2009
30-yr 4.98 15-yr 4.40 5-yr ARM 4.35 1-yr ARM 4.47

Oct 29, 2009
30-yr 5.03 15-yr 4.46 5-yr ARM 4.42 1-yr ARM 4.57

Oct 22, 2009
30-yr 5.00 15-yr 4.43 5-yr ARM 4.40 1-yr ARM 4.54

Oct 15, 2009
30-yr 4.92 15-yr 4.37 5-yr ARM 4.38 1-yr ARM 4.60

Apr 23, 2009
30-yr 4.80 15-yr 4.48 5-yr ARM 4.85 1-yr ARM 4.82

At this point the 1 year arm, being higher than the 5 year arm, is out of the picture. The 5 year arm is substantially lower than the 30 year rate. But it still seems like a worse option than the 30 year mortgage. First the 30 year rate is pretty low (the 11th lowest rate in history). In addition the expectation is that rates will move up so the benefit of getting a lower rate with a 5 year arm is outweighted by locking in for a short period of time.

In addition to rates its also interesting to look at mortgage payments. We took today's rates and using a mortgage calculator determined the payment for a 200k loan. We also did the same thing with rates from October 29th and April 16.

Nov 12
30-yr $1062.66
15-yr $1515.71
5-yr ARM $988.56
1-yr ARM $1008.62

Oct 29
30-yr $1077.31
15-yr $1525.9
5-yr ARM $1003.88
1-yr ARM $1021.7

Apr 16
30-yr $1018.12
15-yr $1574.3
5-yr ARM $1052.96
1-yr ARM $1051.74

Compared to two weeks ago a payment is 1.35 percent lower and for a 200k mortgage payment the payment is $14.65 less now than it would have been two weeks ago. While this is not a huge difference its not totally insignificant.

So what is our advice to people currently looking to get a loan? With rates near historical lows its probably a good idea to lock in rates earlier rather than later. While their is a chance that rates could move lower its doubtful they could fall too much lower than where they stand today. On the other hand there is more of a risk of mortgage rates moving up in the next few weeks.

Ki lives, and works, in Austin, Texas. He maintains a website escapesomewhere.com for future buyers of Austin real estate. The site offers information on historical mortgage rates along with a mortgage rate widget.

Famous Historic American Homes

Ki Gray - Austin Real Estate — Fri, 06 Nov 2009 03:17:50 -0600

There are a plethora of historic homes existing in the U.S. today. Some are noted for their connection to our heritage as a nation. Others are famous for their association to crime, criminals and movie stars. And, of course, you've got literary greats, real estate tycoons, media moguls, publish giants and all the rest. Here, you'll find just a few with details that might surprise you.

Robert E. Lee's old home, AKA Custis-Lee Mansion, became home of the honorable Arlington National Cemetery. Overlooking the Potomac River, the Greek revival style manor was selected by the government as the site for the cemetery to ensure that Lee never again returned to his home after the Civil War. Sitting on 1,100 acres, the mansion hosts two kitchens for the summer and winter. The most prominent features of the estate are the eight massive, 5-feet-in-diameter columns supporting the portico. The mansion is managed by the National Park Service, while the surrounding grounds, known as Arlington National Cemetery, are managed by the U.S. Department of the Army.

William Randolph Hearst, newspaper magnate and grandfather to the infamous Patti Hearst, once owned a mansion at 1101 N. Beverly Dr. in Beverly Hills, California with his actress girlfriend Marion Davies. Built in 1926, it's estimated worth is $165 million with 9 bedrooms, 15 bathrooms, 20,570 square feet of living and sits on a 153,766 square foot lot. Just a small slice of heaven right there outside of Hollywood. If you were in the market to buy the property with a 30-year, fixed-rate loan at, let's say, 4.91 percent with 20 percent down, you'd have estimated monthly payments of just $31,645. Can you say cha-ching?!

George Washington Vanderbilt II completed the construction of the Biltmore Estate in 1895, which is located in Asheville, North Carolina. With 250 rooms in 175,000 square feet of living space, the home is the largest privately owned estate in the U.S., and is still owned by Vanderbilt's grandson, William A. V. Cecil II. The French Broad River divides the estate in half. Resting magnificently on 8,000 acres, the mansion echoes the sentiment of an elaborate French chateau and the excesses of the America's Gilded Age. It was inducted in the National Historical Society and designated a National Historic Landmark in 1964. Tourists worldwide visit the palatial estate throughout the year. Featured are a 70,000 gallon indoor swimming pool, a bowling alley, a two-story library, dated antiquities throughout and 75 acres of formal gardens with a winery and triple A, 4-diamond, 213-room hotel called the Inn on Biltmore Estate. Tickets to tour the estate may be purchased in advance on the Biltmore website.

David Gamble of Proctor & Gamble fame hired architectural firm Greene & Greene (G&G) to design the Gamble House (AKA David B. Gamble House), which was completed by 1909. Located in Pasadena, California, the estate was declared a National Historic Landmark in 1977. Matching inlay was designed by G&G for the custom-made furniture and tile mantle surrounds, which were built by contractors Peter and John Hall. A secret door that leads to the kitchen is hidden in one of the wooden panels of the entry hall. Another panel leads to a clothes closet. The three-story, Arts and Crafts masterpiece, influenced by Japanese aesthetics, sits on an expansive acreage decorated generously with Arroyo stone paths that give the effect of running brooks. Realizing the artistic significance of the estate, the Gamble family deeded Gamble House in joint ownership to the City of Pasadena and the University of Southern California School of Architecture in 1966.

Al Capone stunned law enforcement with his ability to divert indictments and skirt the law. Infamous for his crime syndicate leadership during the Prohibition Era, Capone lived much more modestly in private in contrast to his flamboyant public persona. Located at 7244 S. Prairie Avenue in Chicago, Capone's 4-bedroom, 2-bath, modest unit in the multi-family home was built in 1908. Last heard, the home was for sale for a mere $450,000. If you wanted to buy it at a 30-year, fixed-rate loan at 4.92 percent with 20 percent down, you'd pay an estimated $1,915 per month.

Nathaniel Hawthorne immortalized the House of the Seven Gables in his literary fictional novel with the same name. Located in Salem, Massachusetts, the home is currently a non-profit museum and still functions as an active settlement house hosting programs for children. Although Hawthorne never lived in the home, he visited his cousin Susannah Ingersoll who lived in the home when he was growing up. One quite clever creation found in the home is what looks like a wooden closet. The false back, however, opens to a hidden staircase leading up to the attic.

Erotica king Hugh Hefner lives in his current Playboy Mansion (AKA Playboy Mansion West) in Los Angeles, California. Located at 10236 Charing Cross Road in Holmby Hills, the manor is famous for its lavish parties and rumored orgies. Built in 1927, the 14,217 square foot home sits on a 219,107 square foot lot and was acquired by Hefner in 1971 for $1.1 million. With 29 rooms, the estate hosts a game room, wine cellar, an aviary, a zoo, tennis courts, waterfall and a swimming pool, along with a sauna and bathhouse. One room in the palatial home known as the "Elvis Suite" has been kept off limits to public viewing. Hefner said the room holds sentiment due to the one night that Elvis Presley stayed in it in the early seventies. He was accompanied by no less than eight girls. Although, sports stars, movies stars and rappers request the suite when they come there, Hefner says he's kept it off limits.

Ki caters to future buyers of Austin real estate. He has a searchable website of Austin homes for sale. He site has statistics and info on Cedar Park and Austin real estate

Storm Clouds on the Solar Horizon

Ki Gray - Austin Real Estate — Fri, 06 Nov 2009 03:10:49 -0600

This is the conundrum of doing good things for the environment: How do you embrace green energy without the old technology providers becoming broke and obsolete in the process? That is the dilemma faced by the City of Austin and Austin Energy as they try to promote solar energy.

Austin Energy began an initiative to increase solar power in the community by offering rebates for installing solar roof-top panels. It is one of the largest solar rebate programs in the country and has provided more than $18 million in solar rebates since 2004. It has been so successful, in fact, that the program had to be revamped recently to accommodate the volume of customers who want to take advantage of the solar rebates. The 400 applications received so far this year far exceed the Austin Energy budget for the program.

Now Austin Mayor Lee Leffingwell has proposed a new program called "Energize Austin" to provide solar power to more people in the community. The program would offer low-interest loans to allow people to install solar arrays on the roof of their home. A large enough solar panel system could essentially eliminate electricity bills, and greatly reduce the income for electricity providers like Austin Energy.

A solar array works through photovoltaic technology that turns sunlight directly into electricity. An average customer can get 10 -40 percent of their electricity through solar panels on the roof. Austin Energy also offers "net billing" meaning that customers using solar energy can get credit for the times the solar panel produces more energy than a home consumes. Solar panels are easy to maintain and can be easily upgraded to larger systems from the existing system.

According to Austin Energy, the whole community benefits from solar power because it is a clean, quiet, renewable energy that reduces the need for energy made from fossil fuels, like coal and oil. It offers a cleaner, healthier environment, as well as creates economic opportunities. For example, due to the success of the solar rebate program, Austin Energy went from using four installers to 24.

But with the City now proposing to loan customers the money for the cost of installing a solar array, something the rebate program did not do,
Austin Energy is concerned that solar energy use in Austin could expand too quickly. According to the Austin-American Statesman, Austin Energy General Manager Roger Duncan says "the city could have trouble maintaining its grid unless it comes up with a new business model for the utility." Austin Energy is using a 10 year plan for the rebate program to allow for the price of the technology to become more competitive.

Austin is probably not unique in this green dilemma. Berkeley, CA came up with the loan idea that Leffingwell is now proposing for Austin, however solar advocates say it did not dramatically change solar use in Berkeley. Austin Energy should be commended for its many green initiatives, not just the solar rebate program. The hope is that there is a way forward to improving the environment without everyone, including the companies that have provided services for decades, having to pay too high of a price.

Ki lives in the Austin area, where he enjoys biking the hill country. His website compiles information on Austin Texas real estate. His site has a graphical search of the Austin MLS along with a statistics blog on Austin real estate.

Mortgage Rates Fall Back Below 5.00

Ki Gray - Austin Real Estate — Fri, 06 Nov 2009 03:06:48 -0600

After rising steadily for the last 3 weeks mortgage rates fell back down this week. The 30 year rate fell from 5.03 to 4.98. The 15 year rate fell from 4.46 to 4.40. The 5 and 1 year arm fell from 4.42 to 4.35 and 4.57 to 4.47 respectively. This looks like more of a hiccup as mortgage rates steadily start there rise. At this point the overwhelming consensus is that mortgage rates are going to rise in the next six months. But the lowered rates do provide an opportunity for potential homeowners to lock in rates at sub 5.00 rates. Below are rates from the weeks from October 8, 2009 to November 5, 2009.

Nov 05, 2009
30-yr 4.98 15-yr 4.40 5-yr ARM 4.35 1-yr ARM 4.47

Oct 29, 2009
30-yr 5.03 15-yr 4.46 5-yr ARM 4.42 1-yr ARM 4.57

Oct 22, 2009
30-yr 5.00 15-yr 4.43 5-yr ARM 4.40 1-yr ARM 4.54

Oct 15, 2009
30-yr 4.92 15-yr 4.37 5-yr ARM 4.38 1-yr ARM 4.60

Oct 08, 2009
30-yr 4.87 15-yr 4.33 5-yr ARM 4.35 1-yr ARM 4.53

Apr 16, 2009
30-yr 4.54 15-yr 4.93 5-yr ARM 4.83 1-yr ARM 4.82

As has been the case for several months the interest rate to watch is the 30 year rate. When rates are low (and the expectation is that they are going to rise) there is no real reason to look at short term ARMS.

In addition to looking at rates we also calculated the mortgage payments for a 200k loan based on today's rates.

Nov 05
30-yr $1071.19
15-yr $1519.78
5-yr ARM $995.62
1-yr ARM $1009.8

Oct 22
30-yr $1073.64
15-yr $1522.84
5-yr ARM $1001.52
1-yr ARM $1018.12

Apr 09
30-yr $1015.74
15-yr $1573.26
5-yr ARM $1043.29
1-yr ARM $1057.8

This show how little rates have moved in the last two weeks. For a 30 year loan on a 200k mortgage the payment is $2.45 less a month for a decrease of about 1/5 of 1 percent

So what is our advice? First I would avoid anything but a 30 year mortgage. Their is simply too much of a chance of higher rates. Second I would start looking for a mortgage earlier in the process instead of later. Basically their are too many issues with lending right now and it's a good idea to find out any issues to get a loan earlier in the process. Second it's a good to check into the 7,500 tax credit. The new program has expanded the eligibility so if you didn't qualify for the 8,000 tax credit you might qualify for the new one.

Ki works, and lives, in Austin, Texas. His website arranges details on the Austin Tx real estate market. It also has graphs of mortgage rate trends and a few free mortgage widgets.

Traditional Home Loan or ARM?

Ki Gray - Austin Real Estate — Mon, 02 Nov 2009 01:16:35 -0600

If you're obtaining a mortgage and contemplating whether to get a traditional home loan or adjustable rate mortgage (ARM), there are definitely some things you'll want to consider.

Before deciding on either, you'll want to understand the dynamics and look into the advantages and disadvantages of each. Some considerations to keep in mind are how long you intend on keeping the home; whether one of your intentions in buying a home is to build credit and what will give you the best annual percentage rate (APR) in the beginning and throughout the lifetime of the loan.

Traditional home loans are typically known as fixed rate mortgages (FRMs). The most popular FRM, a longer term mortgage, has the following characteristics:

* Payments are fixed throughout the term of the loan
* Are available from 15 to 40 years, in 5 year increments
* The shorter the loan term, the lower the interest rate
* The shorter the loan term, the less interest you will pay over the life of the loan
* The bulk of loan payments go to interest in the beginning of the loan
* There are penalties for early payoff on some FRMs - ask your lender

Included in FRMs is the balloon loan, a short-term, fixed-rate mortgage. The balloon loan has some advantages in that the interest is typically much lower and you have lower monthly payments than on a 15- to 40-year term loan. The terms are usually from 3 to 7 years, but you are required to pay the remaining balance in full at the end of the term.

If you are considering a balloon loan and think you will be keeping the home for a long period of time, obtain one with a refinancing option. Certain conditions will have to be met, but it allows you to convert the remaining balance of the loan into a longer fixed-rate mortgage at the end of the term without going through the buying process again.

With the caveat of the refinancing option, you don't have to go through another credit check or reapproval of the property. The interest assigned to the new loan will be at the current market rate at the time it is converted. A processing fee may be required when obtaining the new loan. You'll want to ask about this long before you agree to the balloon loan.

ARMs, on the other hand, provide you with a broad array of options, advantages and disadvantages. Similar to a balloon loan, the payments and interest rate are typically lower in the beginning of the ARM term. Periodic assessments are made throughout the lifetime of the loan, which can lower or raise your interest rate and monthly payment.

Keep in mind, interest rates typically are higher at the first assessment of the loan and often continue to rise. These kinds of loans, however, commonly have caps that put a ceiling on your maximum monthly payment that can be required of you throughout the lifetime of the loan. The excess will simply be added to the principal of your loan, which could extend the lifetime of your loan.

ARMs option ARMs are also available, can be very complex loans, so you'll want to understand the conditions of the loan, along with terminology applicable to the loan. Ask your lender prior to committing to an ARM about the advantages and disadvantages.

Generally, ARMS are best suited for those who are making an investment where rents are low and property values are high. This option allows you more cash flow. They also often benefit seasonal workers and those who own businesses where the revenues fluctuate.

Keep in mind, the interest rate on an ARM can adjust as soon as one month from the loan's inception, depending on the conditions of the loan. Some terminology to ask about and pay close attention to is:

* Lifetime cap limit
* Index
* Margin
* Periodic or adjustment cap limit
* Interest rate cap
* Loan recast
* Minimum payment factor

General advantages from a traditional mortgage are that you have significantly more flexible payment options and your monthly payments at the onset of your loan are much lower. One disadvantage is that if you only pay the minimum payment due monthly, your loan will recast at some point and your lender will recalculate your loan payments over the next 30 years based on your remaining balance. This could drastically raise your monthly loan payment.

Again, ask your lender as many questions as you can think of. Compare terms, advantages and disadvantages of each. Make sure you understand the terminology used and conditions prior to agreeing and signing to any loan.

Ki lives and works as a realtor in the Austin real estate market. There is comprehensive Austin home search on his website. His website also has detailed information on Austin real estate and a mortgage calculator widget.

The Income Gap Widens

Ki Gray - Austin Real Estate — Mon, 02 Nov 2009 01:09:37 -0600

The Great Recession is not the great American equalizer after all. It's been widely reported recently that this recession hit middle and low income families the hardest, while the wealthy have continued to prosper. It may be chic to save and everyone brags about coupon clipping, but the idea that "we are all in this together" may not actually be the case.

According to the Associated Press, incomes have declined across all demographics, but at a greater percentage for middle and lower income groups. "Median income fell last year from $52,163 to $50,303, wiping out a decade's worth of gains to hit the lowest level since 1997." In fact, the gap between the rich and the poor has widened to the point that the wealthiest ten percent of Americans earned 11.4 times those below the poverty line earning $12,000 a year. Previously, the highest earning difference was 11.22 times higher in 2003.

The unemployment rate stands at a thirty year high of 9.7 and a great majority of those job losses have been lower income ones, particularly in construction and manufacturing. While wealthier Americans have had reductions in executive pay, far more of the middle and lower income earners have lost their jobs. This disparity between the rich and the poor is more pronounced in larger cities, like Atlanta, New York and Chicago.

The recession seems to be coming to a close with signs that the economy is finally growing. The Commerce Department reported that the economy shrank less than expected, with gross domestic product dipping just 0.7 percent from April to June, after dropping 6.4 percent in the first quarter of the year (AP). Measuring the value of all goods and services, the GPD is a good barometer of the health of the economy.

The better than anticipated numbers are attributed to businesses and consumers spending more than expected. The better news is largely credited to the government's $787 billion stimulus package and programs like Cash for Clunkers. What is not expected to improve anytime soon is the unemployment rate, which analysts believe will reach 10 percent by the end of the year.

As hiring in most sectors remains stagnate and layoffs continue, the gap between the haves and have-nots is likely to widen. Congress is considering ways to regulate executive pay and this along with The Great Recession is not the great American equalizer after all. It's been widely reported recently that this recession hit middle and low income families the hardest, while the wealthy have continued to prosper. It may be chic to save and everyone brags about coupon clipping, but the idea that "we are all in this together" may not actually be the case.

According to the Associated Press, incomes have declined across all demographics, but at a greater percentage for middle and lower income groups. "Median income fell last year from $52,163 to $50,303, wiping out a decade's worth of gains to hit the lowest level since 1997." In fact, the gap between the rich and the poor has widened to the point that the wealthiest ten percent of Americans earned 11.4 times those below the poverty line earning $12,000 a year.

The unemployment rate stands at a thirty year high of 9.7 and a great majority of those job losses have been lower income ones, particularly in construction and manufacturing. While wealthier Americans have had reductions in executive pay, far more of the middle and lower income earners have lost their jobs. This disparity between the rich and the poor is more pronounced in larger cities, like Atlanta, New York and Chicago.

The recession seems to be coming to a close with signs that the economy is finally growing. The Commerce Department reported that the economy shrank less than expected, with gross domestic product dipping just 0.7 percent from April to June, after dropping 6.4 percent in the first quarter of the year (AP). Measuring the value of all goods and services, the GPD is a good barometer of the health of the economy.

The better than anticipated numbers are attributed to businesses and consumers spending more than expected. The better news is largely credited to the government's $787 billion stimulus package and programs like Cash for Clunkers. What is not expected to improve anytime soon is the unemployment rate, which analysts believe will reach 10 percent by the end of the year.

As hiring in most sectors remains stagnate and layoffs continue, the gap between the haves and have-nots is likely to widen. Congress considering ways to regulate executive pay along with President Obama suggesting higher taxes on the wealthy as one the ways to pay for health care reform, the resentment between the two ends of the income spectrum may also increase. While the Great Recession is the worst state the economy has been in since the Great Depression, some Americans are faring better than others.

Ki's real estate business is based in Austin, Texas. His website gives comprehensive information on Austin real estate. His website provides future home buyers with a free search of homes in the Austin MLS along with a blog with statistics and commentary on Austin Texas real estate.

Austin is Festival Central

Ki Gray - Austin Real Estate — Mon, 02 Nov 2009 01:04:57 -0600

Austin is well known for the South By Southwest Music and Media Conference and Festival each spring and the Austin City Limits Music Festival each fall. But music isn't the only thing putting Austin on the map. Austin also hosts the Texas Book Festival and the Austin Film Festival and Conference every year.

Started in 1994, the Austin Film Festival is all about the creative process of screenwriting and film making. The annual film festival and conference held in October highlights local organizations and businesses that work in all elements of the film industry.

This year's festival features films starring actors like George Clooney and Meg Ryan. The conference and festival bring many big names from the film industry to Austin, but the event stays true the capital city's laid back feeling. There are no red carpets and little paparazzi at the eight day event.

The conference itself offers panels, lectures and roundtable discussion on all aspects of the film and screenwriting industry, and encourages budding film writers to take part. The festival is a series of screening of all types of films: shorts, documentaries, animation, independent and premieres. Unknowns in the film industry rub elbows with the bigwigs and many have had their work move into prominence due to this film festival.

The film festival is also a series of parties with different themes at many different downtown venues. Austin restaurants, bars, shops and hotels benefit from the festival patrons. The awards at this year's festival will go to industry greats like Ron Howard.

The Texas Book Festival, also going on this October in Austin, was started in 1995 by Laura Bush. The former first lady has always been a literacy advocate and started the ball rolling on the Texas festival to honor Texas writers and promote the love of reading.

The two-day event has the unique venue of the Texas State Capital buildings and grounds. Hopefully, the weather gods will smile down on Austin with more blue skies and sunny fall weather in the forecast for the last weekend in October. Nearly 50,000 people will fill the marbled halls and hallowed chambers of the state house to listen to lectures and panels. Other downtown venues also get involved, like the historical Paramount Theater and the Austin Children's Museum hosting special events for children's authors.

The festival not only celebrates literature, but also addresses some of the issues faced by the book industry. One of this year's lectures, "Are Books Dead?," addresses the future of books and the changing ways we will read them. This year will feature over 200 authors, like Margaret Atwood, Jane Smiley, Harold Evans, Gail Collins and Buzz Aldrin. The festival is free and open to the public, with lots of opportunites for book signings.

SXSW and ACL might bring the national camera crews and the big names in music, but they aren't the only festivals promoting the arts in this unique capital city.

Ki works, and lives, in Austin Texas. His website has thorough descriptions of Austin Texas real estate. It also has a map based search of the Austin MLS along with a blog covering news and events in Austin real estate.

Mortgage Rates Continue To Rise: Are Sub 5 Rates Gone Forever?

Ki Gray - Austin Real Estate — Mon, 02 Nov 2009 00:57:33 -0600

So are sub 5.0 rates gone forever? The short answer is probably yes. While rates might briefly fall below 5 in the next month for the most part the era of sub 5.0 rates is over. Mortgage rates rose for the third straight week. The thirty year rate rose from 5.00 to 5.03. The 15 year rate rose from 4.43 to 4.46. The 5 and 1 year rates rose from 4.40 to 4.42 and 4.54 to 4.57. Its interesting to note that the 1 year arm has had a higher rate than the 5 year arm for the last few weeks. Below are rates for the last few weeks.

Oct 29, 2009
30-yr 5.03 15-yr 4.46 5-yr ARM 4.42 1-yr ARM 4.57

Oct 22, 2009
30-yr 5.00 15-yr 4.43 5-yr ARM 4.40 1-yr ARM 4.54

Oct 15, 2009
30-yr 4.92 15-yr 4.37 5-yr ARM 4.38 1-yr ARM 4.60

Oct 08, 2009
30-yr 4.87 15-yr 4.33 5-yr ARM 4.35 1-yr ARM 4.53

Oct 01, 2009
30-yr 4.94 15-yr 4.36 5-yr ARM 4.42 1-yr ARM 4.49

Apr 02, 2009
30-yr 5.05 15-yr 5.13 5-yr ARM 5.00 1-yr ARM 4.78

The only two mortgage products that are interesting is the 30 year and the 15 year fixed rates. With 1 year rates higher than the 5 year arm they are obviously pointless. And with current rates low compared to historical mortgage rates the lower rates of the 5 year arm (compared to the 30 year rate) don't seem worth the risk. In addition to mortgage rates lets look at mortgage payments. Taking today's rates we can translate them into a payment for a 200k mortgage. We did the same thing with rates from October 15th (2 weeks ago) and April 2 (6 months ago).

Oct 29
30-yr $1077.31
15-yr $1525.9
5-yr ARM $1003.88
1-yr ARM $1021.7

Oct 15
30-yr $1063.88
15-yr $1516.73
5-yr ARM $999.16
1-yr ARM $1025.28

Apr 02
30-yr $1079.76
15-yr $1595.16
5-yr ARM $1073.64
1-yr ARM $1046.91

A mortgage payment is about $13 more than 2 weeks ago and about $2 less than it was six months ago.

So why are rates rising? Although its a weak recovery, the economy by most accounts is experiencing a recovery. In addition, the government has lowered the amount of mortgage backed securities it was buying which was keeping rates artifically low.

So what is our advice to people interested in buying a house? It might seem obvious but I would lock in now instead of waiting. Almost all signs point to mortgage rates rising over the next few months. The real question is will the strengthing real estate market be able to withstand higher rates? We will have to wait to find out.

Ki writes frequently about the mortgage industry and mortgage rates. He caters to the real estate market in Austin. His site www.escapesomewhere.com www.escapesomewhere.com has information on historical mortgage rates along with a free mortgage widget.

Why Recession Recovery Will Be Slow

Ki Gray - Austin Real Estate — Sun, 25 Oct 2009 00:11:25 -0500

Austin is one of 79 metro areas across the country to be officially out of the recession, according to Moody's. Although the state of Texas is still considered to be suffering the constraints of the recession, Austin and seven other Texas cities have been given the all clear. This determination was based on an index that included employment, housing starts and home prices.

In fact, the latest poll of economist says that at least 80 percent of them agree that the recession is over. Unfortunately that piece of good news may not mean whole lot as the American economic landscape looks completely different than it did two years ago. The survey by the National Association for Business Economics released recently said to expect a slow recovery. Here are some reasons the recession recovery may be slow:

Unemployment
There seems to be little doubt that the unemployment rate, which is currently 9.8 percent, will reach 10 percent by the first part of next year. Even with the number of new jobless claims down for the fourth week in the last five, layoffs continue. Federal Reserve Chairman Ben Bernanke has warned that unemployment is likely to remain above nine percent through 2010.

Consumer Spending
Worries over unemployment affect consumer spending habits, even of those Americans who have jobs and job security. The personal saving rate is up for the first time in two decades and the cautious spending that began during the height of the recession has not changed appreciably in recent months. For example, when gas prices hit the $4 per gallon mark in the summer of 2008, people significantly changed driving habits. The annual American Community Survey showed that the numbers of Americans commuting to work, a habit stared during the high gas prices, remains the highest number in more than a decade. People are generally not eating out as much or making as many big purchases. It remains to be seen if holiday spending this season will help revive the suffering retail sector.

Real Estate
The economists surveyed expect housing in 2010 to contribute to the overall growth of the economy for the first time since 2005. However, the census data shows that less people are moving these days, with population trends to the sunbelt states actually being reversed. Real Estate prices nationwide are down and the percentage of Americans owning homes dropped to 66.6 percent this year from the high of 67.3 percent in 2006.

Credit
Even with the Dow Jones industrial going over 10,000 and banks reporting billion dollars profits, credit remains tight. A recent report from the Federal Reserve shows that households have reduced their borrowing for the seventh straight month, while at the same times banks are lowering credit limits. Banks seem to be enemy number one when it comes to this recession, yet they have to play an integral part in the recovery. Until credit for both businesses and individuals starts flowing again, employment and housing is likely to remain stagnant.

Ki lives, and works, in Austin, Texas. His site provides potential homebuyers a free search of the Austin MLS. He also provides detailed information about Austin real estate on this site along with profiles of neighborhoods like Westminster Glen in central Austin.

Austin Fall Festivities

Ki Gray - Austin Real Estate — Sun, 25 Oct 2009 00:04:25 -0500

The air isn't exactly crisp in Austin these days, but fall has found its way to central Texas all the same. Whether it's the University of Texas football fever or the Halloween decorations on every corner, autumn has a hold on Austin and fun festivities abound:

Oktoberfest Austin holds its first annual festival on October 24 in Waterloo Park. Bring two canned goods benefiting the Capital Area Food Bank and enjoy local bands, kids' entertainment and an arts and crafts market.

This is the 49th year for the annual "Salute to Sausage" celebrating German heritage with food and music. Wurstfest runs from October 30 to November 8 in Landa Park in New Braunfels. There are all kinds of fair-like attractions at this festival, including rides and live music.

Pumpkin Patches, or at least the kind that pick the pumpkins and bring them to the public for sale, abound in Austin. Some of them even offer far more than pumpkins. The Elgin Christmas Tree Farm offers a pumpkin patch and hay bale maze. Sweet Berry Farms in Marble Falls has a pumpkin patch, hayrides, and hayfield mazes for all ages, along with homemade ice cream and other treats.

Halloween can be celebrated all month long in Austin. Boo at the Zoo is a unique opportunity to see the zoo by flashlight on weekends in October. Wear a costume, bring a picnic and take a haunted train ride.

Spend an evening at the Austin Nature and Science Center for a Halloween Howl. See the spooky side of nature with all kinds of hands-on family fun. Check out the other Parks and Recreation events like a free haunted house and Halloween carnival.

There is the famous, or perhaps infamous, Halloween on Sixth Street with all sorts of rowdy revelers having scary fun. Shop for a costume at the famed Lucy in Disguise on South Congress before heading downtown to enjoy drink specials and live music.

The Mexican American Cultural Center celebrates Dia del los Muertes with food, music and family fun November 1. Come see the array of traditional altars honoring the dead and even create your own.

Most of the outdoor pool venues have closed for the season, but the cooler weather makes it a great time to take advantage of all the other outdoor fun Austin has to offer. Hike or bike the Barton Creek greenbelt. Walk the 100s of steps up to Mt. Bonnel and check out the view. Watch some college soccer or take in a high school football game. Stroll down South Congress Avenue or the Second Street district and see the one-of-kind shops and eateries. The fun fall festivities in the Austin area are practically endless.

Ki graduated from the University of Texas in Austin. He maintains a website with detailed information about Austin Texas real estate. The site allows future home buyers to search for homes in the Austin MLS. His blog has monthly statistics on Austin real estate.

Options for Avoiding Foreclosure

Ki Gray - Austin Real Estate — Sun, 25 Oct 2009 00:01:52 -0500

If you are having trouble keeping up with your mortgage payments, you're not alone. If you are three months or more behind in your mortgage payments, then you are one in an estimated 3 million or more who are currently in one state or another of default.

In this situation, however, what are your options for avoiding foreclosure?

Regardless of where you are right now with your mortgage payments, the most important thing you can do is to contact your lender when you first realize you are having problems. Never ignore communication from your loan servicer.

It is to the lender's advantage to work out a solution with you if at all possible. Discuss options with your lender. Initially, most lenders will not discuss options available until you complete and submit to them a workout packet. A workout packet includes a detailed letter as to how you arrived at your situation, an income and expense statement and other information specified by your lender.

Some workable options may be a loan modification, which modifies the payment and even sometimes lowers the interest rate of your existing mortgage. The intent is to make it more affordable for you to make the payments. Typically, the result is a mortgage payment at 31 percent or below your current total household income.

In the meantime, respond to all communication from your lender. Become familiar with your rights. Read your loan agreement and find out what steps are built into your home loan regarding default.

Research your state's foreclosure laws and the relative timeframes, since laws differ from state-to-state. Information should be available online; however, you may also want to contact your State Government Housing office directly for details. The Department of Housing and Urban Development (HUD) is a great point-of-contact for information.

HUD housing counseling agents are on-hand to assist in this type of situation. You may contact one by calling 1-800-569-4287. You may also access resources in your state via the HUD website.

Once you understand the timeframes and obtain all the information you can regarding your situation, you may want to find a good bankruptcy attorney just in case your lender does not provide you with a feasible option, or does not provide you with a feasible option in time to avoid foreclosure.

In the midst of all your activity to prevent foreclosure, a primary consideration should be to modify your spending. It's amazing how much you can trim when looking at alternatives to entertainment and other purchases.

In the case of job loss or other reasons for reduced income, families often find it difficult to stop the prior cycle of spending. Even if a previous family budget was kept, it's critical to restructure the budget according to the new net income and eliminate any unnecessary spending in order to modify spending habits.

If brands were important before, ditch the brand name and opt for generic or less expensive brands. Hold off on buying clothing and accessories. If you just have to purchase such items, make sure you build a minimal amount into your monthly budget for items that can easily blend into your existing wardrobe. Look for alternative entertainment, like $1.00 video rentals at a local Redbox.

There actually could be a silver lining to this cloud in working with your family members to reduce spending. With input from all family members, you might be surprised at the savings. In addition, if you opt for a weekly eat-in family theme night, instead of that expensive dinner and movie you were used to, a greater sense of bonding might be the result. Also, ask everyone the question, "Are there assets we have that could be sold?" Again, input from all family members could result in some unexpected revenue.

Another benefit found serendipitously through a layoff is that some who have lost jobs have found other opportunities they never would have looked for had they never been laid off.

Finally, stay away from foreclosure rescue companies and schemes. You don't need to spend money that could be used toward your mortgage in trying to save it. Note that all avenues necessary to avoid foreclosure cost you nothing if you access the appropriate resources, unless you have to go into bankruptcy to save it.

Ki lives, in central Texas and works in the Austin real estate market. His website brings a free search of Austin homes for sale to future homebuyers. There is detailed information about Austin real estate along with a mortgage widget.

Mortgage Rates Start to Rise : Is Inflation Next

Ki Gray - Austin Real Estate — Sat, 24 Oct 2009 23:58:33 -0500

The 30 year rate rose again this week rising from 4.92 to 5.00. Now in the last two weeks 30 year mortgage rates have risen from 4.87 to 5.00. Most of the other major mortgage products rose as well. The 15 year rate rose from 4.37 to 4.43. Both the 5 year arm rising from 4.38 to 4.40 and the 1 year arm was the only product to fall moving from 4.60 to 4.54.

While this is not a huge jump the question is are we seeing the tip of the iceberg with rising rates? The expectation has been that rates would rise as the economy improves. While the economy is by no means doing well it seems to be improving from what we have seen in the last year. Additionally, the government has lowered its volume of buying mortgage backed securities. This has helped mortgage rates to rise in the last two weeks and led to speculation of further rises. Below are rates for the last few weeks.

Oct 22, 2009
30-yr 5.00 15-yr 4.43 5-yr ARM 4.40 1-yr ARM 4.54

Oct 15, 2009
30-yr 4.92 15-yr 4.37 5-yr ARM 4.38 1-yr ARM 4.60

Oct 08, 2009
30-yr 4.87 15-yr 4.33 5-yr ARM 4.35 1-yr ARM 4.53

Oct 01, 2009
30-yr 4.94 15-yr 4.36 5-yr ARM 4.42 1-yr ARM 4.49

Sep 24, 2009
30-yr 5.04 15-yr 4.46 5-yr ARM 4.51 1-yr ARM 4.52

Mar 26, 2009
30-yr 4.85 15-yr 4.58 5-yr ARM 4.96 1-yr ARM 4.85

In spite of the increases rates are still relatively low. They are lower than at any point before January 2009 and lower than they were just last month. In addition to looking at rates we also like to see mortgage payments. Using our mortgage calculator we translated rates from October 22, October 8 and March 26 into a mortgage payment for a 200k loan.

Oct 22
30-yr $1073.64
15-yr $1522.84
5-yr ARM $1001.52
1-yr ARM $1018.12

Oct 08
30-yr $1057.8
15-yr $1512.66
5-yr ARM $995.62
1-yr ARM $1016.93

Mar 26
30-yr $1055.38
15-yr $1538.17
5-yr ARM $1068.75
1-yr ARM $1055.38

As we can see again there is not a huge difference. Compared to 6 months ago a mortgage payment is only 1.73 percent higher ($18.26 more a month).

So what is going to happen moving forward? The fear of rates hitting 12 percent has probably lessoned. Basically if the economy quickly recovered the speculation was that inflation could spiral out of control. Since the economic recovery seems to be a somewhat slow process the expectation is that mortgage rates and inflation will rise but it's doubtful they will move above 10 percent.

That said if one is looking at buying its best to lock in rates now considering that rates are rising and the expectation is that they will probably be higher a month from now.

Ki has lived and worked in Austin, Texas for over 10 years. He has a comprehensive understanding of Austin Tx real estate. His site provides graphs of historical mortgage interest rates along with a free mortgage calculator.

The Great Recession Has Been a Bumpy Ride

Ki Gray - Austin Real Estate — Fri, 16 Oct 2009 04:25:26 -0500

It is hard to believe just two years ago in October the Dow Jones industrial set a record high of 14,164. According to the Associated Press, just one year after that it was at 8,451 in mid October 2008. Today the Dow is around 9,800. Stocks have rallied recently on signs that retail sales are improving. The last two years have been a bumpy ride.

The AP recently broke down the economic numbers, putting into perspective just where the U.S. economy stands today. "The panic of last fall has been replaced by the resignation that the worst is over but it might be years before the economy booms again." It seems for every gain there is something else to put in the loss column. For example, while the stock market is steadily gaining ground, the total losses in the stock market from the peak of October 2007 to the bottom of March 2009 was a mind-boggling $11.2 trillion.

A positive sign is that after steadily declining for fourteen months, retail sales increased 2.7 percent in August. But the unemployment rate in October 2008 was 6.2 percent and today it is 9.8 percent. Consumer confidence, which is measured on a scale of 1 to 100, was at a record low of 25.3 last October and this month it is 53.1. To put these numbers in perspective, two years ago consumer confidence stood at 95.2.

Some oddly positive side effects of the Great Recession have been the increase in personal savings rate from 0.5 percent in 2005, when home prices were soaring, to 6.9 percent in May 2009. Also, credit card debt held by Americans last September was a staggering $975 billion. That number is down 8 percent now to $899 billion.

To put the housing numbers in perspective, 2005 was a record year with 7 million home resales. January 2009 the annual rate of home resales was 4.5 million, but rose to 5.1 million in August. On the other hand, the median price of homes sold in 2006 was a record high $245,000. The median price of homes sold last October was $213,000 and dipped to $195,000 in August.

Some other signs of the time: Starbucks launched an instant coffee product in September. PepsiCo Inc announced recently that it will continue to offer and develop products with price in mind, feeling customers will continue to be price-conscious even after the recession ends. Retailers will need to stay creative to entice shoppers this holiday season amid rising unemployment. Wall Street may be seeing a smoother path to recovery, but it's still a bumpy ride on Main Street.

Ki works in Austin real estate. He works to help buyers find the perfect property. His website provides general information on Austin real estate. It also allows buyers to search for homes in the Austin MLS along with providing a free mortgage calculator.

Making a Dent in Mountains of Debt

Ki Gray - Austin Real Estate — Fri, 16 Oct 2009 04:15:29 -0500

One of the reasons given over and over for the slow recovery from this recession is the amount of debt so many Americans are buried under. The soaring house values of just two years ago made people feel rich and the financial future looked promising. The future look so promising, in fact, that people spent well beyond their means. It is estimated that personal debt has more than doubled in the last ten years to an average $10,000 per American household.

The crash in home values and the sudden rise in layoffs nationwide left many Americans overextended on their home equity loans and credit cards.
With no easy means to pay off their personal debt, many people are turning to credit relief companies for help. While there are many reputable companies out there offering a wide range of debt elimination services, there are even more debt relief scams. Type "debt relief" into any search engine and a plethora of companies pop up, some of which are legitimate and others who will take a clients money and leave them further in debt. The Federal Trade Commission is investigating dozens of companies who have put people further in debt in the process of "helping" them.

There are several options when it comes to getting out of debt and it is a good idea to do research and know the lingo. There is a big difference between a debt settlement and debt consolidation, for example. A debt settlement company will help a consumer make a one-time payment to clear debts, usually for less than what is actually owed. However, these companies charge a hefty fee and while credit reports will show $0 balances after a debt settlement, it will also show any delinquency history.

Debt consolidation can be done with the help of a credit counselor or pursued without the help of a debt relief service. A legitimate credit counselor will sit down with a consumer and help him craft a realistic debt elimination program, usually giving a 3-5 year window for paying down all debt. Debt consolidation is the process of paying off higher interest balances, like those of a credit card, with a lower interest loan, typically from a bank. With the difficulties consumers are facing get loans these days, it may be helpful to go through a service to help with the consolidation process.

Bankruptcy is a route taken by more and more Americans, but really no one wins in this situation: creditors don't get paid and the consumer's credit is ruined. Bankruptcy is a legal process that clears all debts without having to pay them off, but of course, there are legal fees to be considered. It should be considered the last resort alternative. The best way to start digging out from debt is to take a realistic look at spending habits and set a reasonable budget. Before turning to a debt relief service it's a very good idea to check a company's reputation with both the Federal Trade Commission and the local Better Business Bureau.

Ki enjoys living in Austin Texas for the different local restaurants and the hill country. His site is devoted to Austin real estate. It encourages future buyers to search listings on the Austin MLS. His site also has general information on the Austin real estate market along with graphs showing historical mortgage rates.