Still Cheaper to Purchase

Trulia has released its latest Rent vs. Buy Report, revealing whether buying a home is more affordable than renting in America's 100 largest metropolitan areas.  Looking at homes for sale and for rent on Trulia between June 1 and August 31, 2013, this study compares the average cost of renting and owning for all homes on the market in a metro area, factoring in all cost components including transaction costs, taxes, and opportunity costs.

In the last year, the rate for a 30-year fixed-rate loan rose from 3.75% to more than 4.50%, raising the cost of buying home relative to renting.  Homeownership is now 35% cheaper than renting nationally, down from being 45% cheaper one year ago.

"While it's hard to believe after the recent spike in rates, it's still more than one-third cheaper to buy a home than to rent," said Jed Kolko, Trulia's chief economist.  "Recent rate and home price increases have made buying significantly more expensive than last year, but not enough to tip the math in favor of renting.  This is because rates remain well below historical norms, and prices are still slightly undervalued, too."

Source: NAMP Daily 

Compliments of Suzanne Smith

HNB Mortgage

Move Up Buyers - Join The Party!

Housing demand from move-up buyers selling their current properties to replace them with a more expensive home is on the rise as home equity levels improve.  As home prices continue to increase, so does demand from move-up buyers, who are now able to provide a substantial down payment on a new home after gaining value on rising equity, the latest report from real estate data firm FNC revealed.  "An important sign of a healthy and sustainable recovery is increased housing turnover driven by trade-up buying, which is more or less discretionary spending," FNC Director of Research Yanling Mayer said.

Much of the desire for move-up buyers lies behind rising rates.  "They know if they don't move now, they might be kicking themselves all over again in three months," said Redfin real estate agent Eric Tan.  According to Daren Blomquist, VP of RealtyTrac, 18.5 million homeowners have at least 20% equity or more, putting them in a prime position to sell and 8.3 million owners should have at least 20% equity in the near future if prices continue to appreciate.  "This reflects a market that is transitioning from investor purchases of distressed homes to primary home purchases," said CAR economist Leslie Appleton-Young.

Source: HousingWire 

Compliments of Suzanne Smith

HNB Mortgage

The Forecast For Real Estate in 2011

Freddie Mac analysts point to five features that they believe will likely characterize the 2011 real estate markets:



*Advantageous home loan rates. With Fed observers expecting the central bank to keep the federal funds rate its current target range of 0% to 0.25% for most or all of 2011, advantageous rates will be a feature of the 2011 market. Thirty-year fixed-rate loans are likely to remain below 5.0% throughout the year, and initial rates of 5/1 hybrid adjustable -rate loans will likely remain below 4.0% in 2011.



*House prices have hit bottom. Prices are likely to begin a gradual, but sustained recovery in the second half of 2011.



*Housing will remain affordable. With affordability high, many first-time buyers will be attracted to the housing market next year, likely translating into more home sales in 2011 than in 2010.



*Refinances will dwindle. Many eligible borrowers have already refinanced. While fixed-rates are likely to remain low, they will move up gradually.

*Delinquency rates will decline. Based on the last several business cycles, the share of loans that are 90 or more days delinquent or in foreclosure proceedings generally crests within a year of the start of the recovery in payroll employment. Payrolls began to rise last January, and by the spring delinquency rates had begun to fall.



Source: Freddie Mac

Compliments of Suzanne Smith

HNB Mortgage

Homeowners Are Richer

The average homeowner has a net worth that is about 41 times greater than that of a renter, according to a report from the National Association of Realtors. Homeowners net worth averaged between $150,000 and $200,000 this year, according to the NAR.
The trade group for Realtors said homeowner equity accounts are a substantial part of that net worth. NAR based its research on results from a 2007 Federal Reserve Survey that provides a snapshot of family income and net worth in conjunction with basic demographic makeup. The Fed survey is conducted once every three years. Homeowner net worth back in 2007 was 46 times greater than that of renters, reflecting the economic conditions before housing price declines and a decreasing equities market. The average net worth of a homeowner was above $200,000, while the average net worth of a renter in 2007 was $5,000. It is interesting to see that while many media outlets have questioned the advantages of purchasing in today's markets, the numbers supporting owning are quite clear.

Source: Housing Wire

Compliments of Suzanne Smith

HNB Mortgage

How About Some Ice Cream

They keep talking about the "double dip" in the news and just in case you hear that expression, a double dip is not what you do to an ice cream cone! Well, these days, it is always good to introduce some humor when the news is not always great. However, there is some really good news right now. Rates are the lowest they have been all year. That is really saying something, because rates have been very low ALL year. As a matter of fact, rates on home loans are the lowest they have been in our generation. That is pretty low. Why is that good news? If someone is thinking about purchasing a home or a car or refinancing, it is a great time to move now. Prices are low and rates are ridiculously low, thus the time is right. We need more people to buy homes and cars over the next few months so we can avoid a double dip recession. And that would be a very good thing.
What is the bad news? Rates as low as these are indicative of a slow economy. We just need to see one number from this week to demonstrate how slow things are: first-time claims for unemployment insurance went over the 500,000 mark in the past week. While still lower than the heights of the recession, it was the first time we had crossed the 500,000 barrier since late last year. Once people step up their purchases of homes and cars, this will prompt companies to hire more employees. In turn, this will make consumers more confident to purchase more homes and cars. Then the cycle of economic growth will start back up and talk of a double dip will quiet down. And when that happens, we promise rates will go up. We just can't say when. So, for those who are waiting for the economy to get better, it will cost more for you to purchase if you are behind this curve. The trend setters will just buy their ice cream now while there are enough sprinkles to double dip....
Compliments of Suzanne Smith, HNB Mortgage.

What do you Want and Need in a Home?

Here are many of the considerations you'll want to discuss before searching for home:
* Desired number of bedrooms and baths
*Preferences regarding kitchen, dining, family rooms, etc. and preferred home layout
*Need for a garage or parking space, and if so, for how many cars?
*How important is energy efficiency or other green home features?
* Commuting considerations.
*Landscaping considerations-the need for open play areas, privacy, patio space, decking, ect.
*Related costs such as homeowner association fees and property taxes.
*How much do you want to invest in a home beyond the purchase price, either financially or in terms of sweat equity, if you can't find exactly what you want?
* How long do you plan to live in this home? How does this impact the type of home you will buy, how much you'll spend, and your choice of location?

These are just a few tips before you get started on your new home search. Call Sandy and Sara today with any questions you may have!

Meet Sara Vestal

Meet Sara, Agent for Sandy and Bill Scott.

Raised in a family of Residential and Commercial Realtors, Sara was destined to hold a real estate license. She graduated from Texas Tech University where she received a Bachelor of Science in Human Development and Family Studies. After graduation, she headed to Dallas and served as Development Coordinator for the American Heart Association. Soon after, Texas Tech University employed her to help recruit and advise incoming students from the Forth Worth area. Her husband brought her back to West Texas after receiving employement with Warren Caterpillar. She is now a licensed Real Estate Agent working with Sandy and Bill Scott. Sara is active in the Midland community through The Junior League of Midland, Inc. She spends her time volunteering through the League in varous family education projects. Sara loves West Texas and would be happy to find you a place to call HOME!

Homebuyer Tax Credit Questions & Answers

Who is eligible?
First-time homebuyers are eligible for the $8,000 credit. A person is considered a first-time buyer if he/she has not had any ownership interest in a home in the three years previous to the day of the purchase. Move-up buyers are eligible for the $6,500 credit. Move-up buyers must have resided in their homes for three out of the five previous years.

How does the tax credit work?
Every dollar of a tax credit reduces income taxes by a dollar. Credits are claimed on an individual's income tax return. Thus, a qualified purchaser would figure out all the income items and exemptions and make all of the calculations required to figure out his/her total tax due. Then, once the total tax owed has been computed, tax credits are applied to reduce the total tax bill. So, if before taking any credits on a tax return, a person has a total tax liability of $9,500, an $8,000 credit would wipe out all by $1,500 of the tax due.

What happens if the purchaser is eligible for an $8,000 credit but his/her income tax liability is only $6,000?
This tax credit is what is called a "refundable" credit. Thus, if the eligible purchaser's total tax liability was $6,000, the IRS would send the purchaser a check for $2,000.

Can I use the credit amount as part of my downpayment?
Some states and local governments have provided mechanisms to provide for this by providing a loan secured against the credit. Check with your loan officer for such programs.

This article is compliments of Suzanne Smith with HNB Mortgage.

Happy Holidays!

We would like to wish you and your family a joyful holiday season. Enjoy great family, friends, food, and laughter as we bring in 2010!

10 Reasons to List During the Holidays

1. People that look for a home during the Holidays are more serious buyers!

2. Serious buyers have fewer houses to choose from during the Holidays and less competition means more money for you!

3. Since the supply of listings will dramatically increase in January there will be less demand for your particular home! Less demand means less money for you!

4. Houses show better when decorated for the Holidays!

5. Buyers are more emotional during the Holidays, so they are more likely to pay your price!

6. Buyers have more time to look for a home during the Holidays than they do during a working week!

7. Some people must buy before the end of the year for tax reasons!

8. January is traditionally the month for employees to begin new jobs. Since transferees cannot wait until Spring to buy, you must be on the market now to capture these buyers!

9. You can still be on the market, but keep the option to restrict showings during the six or seven days during the Holidays!

10. You can sell now for more money and we will provide for a delayed closing or extended occupancy until early next year!

~This article courtesy of West Texas Abstract and Title Co.~

More Homebuyers Qualify for Tax Credit

Ann Arbor, MI November 6, 2009 - Congress just passed an expanded version of the $8,000 first time home buyer tax credit that was set to expire on November 30. "The new version of the tax credit has the potential to stimulate the housing market even more than the old version due to the fact that more people will qualify under the new rules," said Gibran Nicholas, Chairman of the CMPS Institute, an organization that certifies mortgage bankers and brokers. "Although the tax credit remains at $8,000 for home buyers that have not owned a primary residence in the last three years, it has been expanded to include a $6,500 tax credit for home buyers that have lived in their current primary residence for at least five consecutive years out of the past eights years. Under the old rules, move-up home buyers did not qualify.

The tax credit applies to homes purchased for less than $800,000 before May 1, 2010. "If you sign a binding contract to purchase a home before May 1st, you would need to close on the transaction before July 1, 2010." Nicholas said. "It works kind of like a gift certificate that can be redeemed for cash. You simply file a form with the IRS right after you buy your home, and the IRS will send you a check for the full amount of your credit.

The income limitation for single tax payers went up from $75,000 under the old rules to $125,000 under the new rules. For married tax payers, the income limitation went up from $150,000 to $225,000. "This means that more people will qualify for the credit - especially in parts of the country with higher costs of living." Nicholas said. "This should help stimulate parts of the housing market that may not have been impacted by the old version of the credit."

There are many creative ways of structuring your home purchase transaction in ways that maximize the benefits of the credit. Here are a few examples:
*The credit applies to 1-4 unit homes as long as you live in one of the units as your primary residence - you could live in one unit and rent out the others.
*If two unmarried individuals buy a home, and only one of the individuals qualifies for the credit based on their income or past home ownership status, the individual who qualifies for the credit can claim the full credit. (Note: In the case of married couples, both spouses must qualify for the credit.)
*The credit applies even if you have co-signers on your mortgage loan.

If you have any questions about qualifying for the new tax credit, please contact Sandy Scott with Real Estate One at 432-683-1377 or Suzanne Smith with HNB Mortgage at 432-683-0081.

This article compliments of Suzanne Smith, HNB Mortgage, Midland Texas, 432-683-0081, suzanne@hnbmortgage.com.

An Ocean of Options

As a buyer, you may find yourself drifting on an ocean of financing options. As lenders tighten their requirements, there are a few aspects of the loan application of which you should be aware before applying for a mortgage.

First, determine whether you are seeking "pre-qualification" or "pre-approval." What's the difference? Generally speaking, when you are pre-qualified, the lender reviews your information and hazards a "best guess" as to the size of loan for which you would qualify.

In the pre-approval process, however, the lender verifies everything on your application, and offers to approve a certain amount at a certain interest rate. Either way, the final loan is only cleared upon receipt of an acceptable appraisal, title check, last-minute credit check, and other verifications. Usually, a pre-approval puts you on stronger buying ground.

A critical aspect of your application is your credit score. Excessive credit, like car loans and credit cards, can sometimes prove as unattractive to lenders as bad or no credit, so make sure that you have plenty of credit available before applying, and put off major purchases until after you've bought your home.

Finally, investigate all of your loan options, compare worst-case scenarios, and do your math. If you need guidance, seek it from a local mortgage specialist or real estate agent who is well versed in current market and lending conditions.

A Welcome Sight

Home staging has become a popular industry and topic, particularly as it relates to improving the appeal of your listing during challenging times in the real estate market. But what about “staging” your yard?

Sure, any steps that you take to improve your interior's appeal will go a long way towards wooing buyers, but it's the outside of your home that they will see first, and you know that first impressions count! Review some of these helpful tips to make your offering an inviting one.

Go green by seeding and fertilizing your lawn for a lush look. Also, bring your home out from hiding by trimming overgrown branches and shrubbery around the house. Give the impression of easy living by hanging a hammock in the front yard. Seriously, little suggestions like that really sink into a buyer's mind.

Give your flowerbeds and borders more striking visual appeal by applying mulch, and edge the beds and driveway, walkways and sidewalk. Planting annuals such as geraniums and petunias will also add to the impact and brighten up empty areas.

The final step in your outdoor "staging" is to powerwash your home's siding and the sidewalk and patio or deck. When you show pride of ownership and that you care about your home's presentation, it will resonate with buyers looking for value and a home in ready-to-move-in condition.

Don't Take Everything

If you plan to move while your home is still listed for sale, you may face a marketing challenge - the vacant home. While lived-in homes may be more attractive during showings, there is much you can do to present your vacant property successfully.

On the outside, give your home an occupied look by asking a neighbor to park their car in your driveway, open and close your drapes, and retrieve any mail that still arrives. During the warm season, have a lawn service maintain the yard (in the winter, a snow removal service may be in order).

On the inside, create a sense of space by leaving some strategically placed pieces of furniture, like a few chairs, tables and lamps. You can create a "bed" by covering an empty mattress box or several moving boxes with a thick comforter.

If you remove furniture that reveals blemishes on the walls, repair and repaint those. If you notice that the carpeting is faded after you've moved furniture, consider replacing it if possible.

Keep it feeling pleasant indoors during all seasons by keeping your power on after you move, and having a neighbor or family member set the temperature at a minimum comfortable setting according to seasonal conditions.

Your agent will have even more suggestions for marketing a vacant home, so put that experience to good use!

Make Your Move

ALERT: Buyers only have until December 1, 2009 to take advantage of the first-time buyers tax credit authorized in the American Recovery and Reinvestment Act of 2009. Consult now with your tax advisor and real estate representative to get moving!

Most first-time buyers (who haven’t owned a home in three years) will qualify. If you're married, you and your spouse must both satisfy this description.

There are income limits for claiming the credit of up to 10% of the home's purchase price, which maxes out at $8,000. If your modified adjusted gross income (on IRS Form 1040, line 37) is less than $75,000 for individuals or $150,000 for married filing jointly, you can claim the maximum credit. For incomes up to $95,000 or $170,000 respectively, the credit is reduced.

This is not a tax "deduction," but a tax "credit," meaning that the amount you claim is reduced from your total tax bill! If you will owe less than $8,000 on your 2009 return, you'll get a REFUND from the IRS for the difference!

The biggest news is that in response to pressure from the National Association of REALTORS®, FHA lenders will allow buyers to use the credit to cover closing costs, buy down the rate or as additional down payment! I urge you to take this money from the government and make your move before December!

Keep the Horse Before the Cart

While many buyers are aware that a mortgage pre-approval letter increases their buying confidence and power, most may not understand exactly why pre-approval is so important. Why should you jump through the application hoops before even beginning your home search?

First, you'll know exactly how much loan you can afford, making your initial home search much easier. Why waste your time looking at homes either out of your reach or well below your financial grasp?

Second, pre-approved buyers stand on solid negotiating ground with sellers. Sellers working with well-qualified buyers are more likely to accept the offer and less likely to stall on terms and conditions.

Notice that the topic of this column is "pre-approval," and not "pre-qualification." What's the difference? Pre-qualification is easy - you provide basic information to a lender, and in a few short minutes, you have an answer. Pre-approval requires strict verification of documentation relating to your employment, credit history, sources of income, etc. It takes more time, but is more accurate and carries more weight.

Understand that pre-approval is not binding, and is still subject to a satisfactory appraisal on the prospective purchase. If your financial situation changes, interest rates rise or fall, or the deadline passes, a recalculation will be necessary; but a little legwork now will pay off handsomely as you approach the finish line on your contract.

A Portfolio of Commodities

Have you ever thought of a home as a commodity? A commodity can be defined as a raw material or product that can be bought and sold. A home is not a raw material, but it is certainly built out of many, like a box full of wood, steel, cement, glass and copper.

Over the long term, home prices usually rise along with the cost of the commodities it takes for construction. While high inventories of housing may be keeping prices lower right now, the cost of the raw materials that are intrinsically tied to a home's value are rising, and rapidly.

With increasingly higher construction costs on the horizon, buying now is an ideal investment, and a hedge against the rising cost of commodities. Every home is a store of value for all the materials, the land and the labor involved in its construction. So the long-term value of a home is tightly connected to the cost of its production, making it a very different type of investment from stocks or bonds.

Investing in commodities has always been a great way to make lemonade from the economy's lemons. And what better way to buy into the commodities market than by purchasing a home? Sooner or later, home prices will be pushed higher by the rising cost of raw materials, so make your move now!

Time For A House Call

A real estate professional recently coined the term "Price Denial Syndrome," a troublesome condition that afflicts sellers having a hard time facing the realities of today's markets. Of course it’s difficult to make a pricing concession, but an overpriced home simply will not sell.

Perhaps the sellers argue that they really need the money, but then they have to ask themselves what they'll do for money if the home doesn't sell. Maybe they figure that they can shoot for the moon now and reduce the price later if they must. However, the longer a property remains unsold, the more likely it is that even more price reductions will follow. Then it’s taken even longer to get a sale at a lower price.

Some sellers might suggest trying a higher price just for the first two weeks, but that's when the interest of serious buyers is always greatest. Those buyers usually look within a certain range, and won't even make an offer at all on an overpriced property.

Most importantly, if the sellers need to buy another home, time is of the essence. If the sale takes too long, they'll be buying at a time when prices and interest rates may begin climbing again.

If you're suffering from PDS, pay attention to the news, review your home's Competitive Market Analysis, and call us in the morning!

Highlights of the New Homebuyer Tax Credit

1. The maximum credit is 10% of the purchase price or $8,000, whichever is less

2. Credit only applies to first time homebuyers, defined as anyone who has not owned a principal residence in the previous 3 years.

3. Credit applies to first time homebuyers who purchase between January 1, 2009 and December 31, 2009

4. Income limits are $75,000/yr for a single person and $150,000/yr for a married couple.

Two Ways To Upgrade

Have you ever overdressed for an event? Perhaps you understood the dress to be formal, but when you arrived in your sequin dress or black tuxedo, everyone else was wearing jeans and turtlenecks. You may recall how everyone stared as you entered the room, looking a bit out of place.

That happens to homeowners too, but it's not called overdressing - it's called over-improving. It happens when property owners remodel a home to the point where its new value far exceeds all others in the neighborhood.

Let’s say that your family has grown, and you begin your improvements by adding a wing with two more bedrooms and another bath. You expand to a three-car garage, and install an outdoor deck. In the process, you add $55,000 in improvements to your $100,000 home.

As long as you continue living in the home, that's not a problem. When it's time to sell, however, you'll face an unexpected challenge. You’ve spent $55,000 on improvements, but buyers are unlikely to be impressed as they compare the prices of other homes in the area, and expect yours to be in line.

Before beginning a major project, determine the impact on your home's value. Consider “upgrading” to a larger home vs. remodeling, getting advice from a lender and a real estate agent. When it's time to sell, you'll be glad you did.