Interest Rates Hit 50 Year Low!

Interest rates on a 30 year fixed rate hit a 50 year low yesterday, signally to home buyers a great time to buy. We are not sure how much longer these rates are going to hold, but you can count on the fact that once the economy starts to show more life, that they will go up and go up quickly.

Currently based on a sales price of $125,000, with a down payment of 5% at the average rate of 5.08%, the monthly payment of principal and interest would be approx. $643.29. Comparable to rent for a 2 bedroom apartment in our local area. Add to this low rate, an $8000 tax credit for first time home buyers, and you have to just shake your head and wonder why they someone would wait. To get a better idea of what type of payment you could expect on different loan amounts,  use our mortgage calculator at www.renow.com. 

Should you decide now is the time to refinance a higher fixed rate loan, or an adjustable loan, you need to take a few things into consideration. Cost of the refinance and the term of how long you plan on living in your current home. Some experts say if not more than a 2% drop don’t even consider it, but this is short sighted to say the least. You need to calculate your break-even point and go from there. How much will it save you monthly, and what is your total cost to refinance? If we estimate that you would save $80 per month, and the refinance fees are $2200(example only), your break-even point would be in 27.5 months. If you are not planning on keeping this real estate for at least this long you are probably no better off refinancing. Check with your CPA as well, some costs are deductible and other tax issues may affect your savings. Just because some programs will entice you in with a “no cost refinance”, don’t be fooled. In these programs the rates tend to be higher to cover the cost, or they add it to your principal amount currently owed. Lenders make money on origination fees and other fees typically, but also can make money based on the rate they charge. Again length of ownership will be the key factor. Consult a Realtor or reputable lender before you jump too quick, and always compare “Apples to Apples”.

At Coldwell Banker Real Estate Now, we are not just trying to sell you a home; we are your real estate resource and partner. Our agents are not high pressure or pushy. We want your real estate experience to be one that will be fantastic and make your real estate investment profitable.

Keep coming back and you will soon see why this site is your real estate resource. If you need an agent to call or email you, please just drop us a note at info@renow.com and we will have someone contact you immediately.

Just Released-Home sales increase 5.1% in February

February home sales nationally increased 5.1%, according to the National Association of Realtors report today.  The majority of the buyers are sharp first-time buyers that are taking advantage of record low interest rates, and the $8000 tax credit.  According to the 2008 NAR profile of home-buyers, over 94 percent of first time home-buyers, either rent or were living with their parents.  Seems as if this group of buyers has had enough of paying rent or living with mom and dad.

Provided that your job is secure, buying now makes more sense than renting.  In addition to taking advantage of the $8000 tax credit, 30 year fixed rates are hoovering around 5%, averaging 5.08% nationwide according to bankrate.com.  The tax credit now expires December 1st, 2009.  Our mortgage calculator on www.renow.com  is also available for you to get started.

FHA financing is the way to go right now in our market, as risked based pricing is not a factor.  Higher loan limits and lower down payments, make FHA financing more appealing then conventional products.  Buyers with larger down payments should also look at this means of financing, as risk based pricing is not a factor.  Mortgage Brokers and Bankers, tend to have  higher yield spread premiums on conventional products.

As always, get a Good Faith Estimate, it isn’t always just the rate that makes the difference.  Loan origination fees, underwriting fees, points, and other closing costs can be confusing so make sure you are comparing apples to apples, when it comes time to buy.

With the stock market climbing, DOW up today almost 500 points, investors are taking advantage of low priced stocks in the same way as buyers should on real estate.  Everyone needs a place to go “home” to, so now is the time to get moving.

Why get Pre-Approved?

With lending requirements having changed with the mortgage meltdown, pre-approval is now more of a necessity.  First off, getting a pre-approval letter from a lender will allow you to concentrate your search on homes that meet your budget.  The benefits also include the ability to find out if you have any credit issues that may have been erroneously reported to the credit bureau, the insight into what requirements you will need to fulfill to obtain financing, and also give you a better negotiating position when you find the home of your dreams.  How?

Consider this as a buyer, you have a pre-approval letter from a reputable lender(they are out there), you have already gathered the required documentation that they have asked to have submitted, and if any problems arise with credit, those have been resolved.  All you need now is a home that meets your needs.  Because you have taken the necessary steps to obtain the loan prior to writing a contract, you will have more information that the Realtor can use in properly stipulating the financing method (conventional, FHA, VA, THDA, etc).  You also gain position in that you are ready to close in a more timely manner.  To sellers, time is money.  Closing in 2 or 3 weeks is much more attractive from a financial bargaining position, then closing in 30-45 days typically. 

With a good faith estimate from the lender, you know what money you will have to bring to the closing table as well.  Should you ask for the seller to help pay any of these expenses, you will also know the limit of their legal participation.  Remember this though, when having the seller pay for part of your closing costs, you are paying them anyway.  If we take for example that today you can buy “property A” for $100, 000 Cash and close immediately,  versus buying the same property for $102,000 and seller paying $2000 in closing costs.  The seller nets the same thing, and possibly if the home does appraise for the higher price all is well.  In this scenario though you have actually just financed that $2000 over the life of the loan, so yes, you are still paying for it.

Where we have seen issues with this is when you go to sell.  Lets go a bit on the wild side, and say that 2 days after closing you decide to sell.  If the cash price was actually $100,000, wouldn’t it be safe to assume that is market value.  So where does the other $2000 come from, when you close you get to pay it back.  Financing closing costs is a pay me now or pay me later situation.  As long as you stay in the home long enough for appreciation to occur and cover these expenses, as well as any selling expenses, and the principal payments reduce the loan balance, you end up and make money.  Sell too soon, you loose. 

Real estate has never been a short term investment.  On average most families stay in a home from 7-10 years, so take this into consideration when you are buying.  You have to have a roof over your head, and depending on your tax situation, owning real estate can be a great investment.  Until December 1, 2009, as a first time homebuyer you are entitled to an $8000 tax credit….it is fantastic!  Catch though, you have to live in the home for 3 years, cannot have owned a principal residence in last 3 years as well.  Before you automatically assume you are entitled, check with a CPA or tax specialist.

Spring is here, and rates are great, inventory is up.  This is the best buyers market we have seen in decades.  Do not look back 5 or 10 years from now and wish you had bought in 2009.

For a great resource on buying and selling, searching for homes, and much more, go to www.renow.com .

Happy St. Patricks Day!

Is your focus making you a victim of the economy?

Is your focus making you a victim of the economy?

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Is now the time to buy?

Buy or Wait?

We are of the opinion that now is the time to buy!  With interest rates at levels almost unimaginable in recent history, the supply of homes on the market at near record levels, this is actually the time to buy.  Trying to time the real estate market is just like any other market, by the time you find out that it has hit the bottom it is too late.  What you hear on a national level is true to some extent, home prices have fallen, but in the Jackson area, we never saw 50-60% appreciation like California, Arizona, Florida, and other high density populated areas, so we haven’t and will not see depreciation like those states.

 

First time homebuyers this year will be eligible for an $8000 tax credit on the purchase of a principal residence.  This is in affect until December 1st, 2009.  It probably never will get any better then this again, for first time homebuyers.  If you are currently renting you really need to consider buying now versus renting.  If you are planning on staying in the area for any period of time over 3 years, you don’t want to miss out.  As some say your ship has just come in.  If you itemize deductions, the interest deduction, the tax credit, and the probability that the market will improve dramatically over the next 3 years is the perfect storm in your favor.  Read more about the tax credit under our buyer section, there are details of the 2009 plan, and frequently asked questions.

 

Real estate sales typically are the slowest from November to February, and in 2008 and now this has been no different then any other year, with the exception of the economy making it more obvious.  Home loans are still available, but you are not going to get into a home for nothing.  Never should have been able to, but now you are seeing what happens because of the poor loan decision criteria.  The old ways of lending on home purchases were based on real income not stated income, not your FICO scores, but your actual ratios of income to debt.  Typically it was 28% for housing, and 36% for all debts including housing.  FHA and VA Loans raised the numbers up to 29% and 41% respectively.To get a quick idea of what price range home you are probably qualified for, simply do this.  Take your annual income and multiply it by 4.  Doing this is not exact by any means because other factors apply, including how long you have worked in your profession, how much other debt you have, what your credit history has been, and so many underwriting guidelines. You need to sit down with a mortgage lender to get an actual prequalification letter, a good faith estimate, and advice on what loan program will meet your needs.   Be sure to get a good faith estimate, and if you talk to several mortgage individuals, make sure you are comparing apples to apples. 

 

There is a difference between a mortgage broker and a mortgage lender, become informed on the differences.  Ask questions! If you feel intimidated by the mortgage individual, find another one.At Coldwell Banker Real Estate Now we want you to buy a home you can afford, not strap you with such a burden that you can’t go out to eat, see a movie, or enjoy a vacation with your family.  Our agents will sit down with you and explain the purchase process, help you get qualified, represent you in the transaction, and advise you with all your real estate needs.  Give any of them a call, to schedule an appointment.  Spring is just around the corner, and market prices tend to move up during that period, so start now.

Don’t hesitate to call us at 731-668-1777 or if you are out of town 1-800-678-6481, we are here to help.

Economic Stimulus and Real Estate

The National Association of Realtors as the largest lobbyist group protecting the real estate industry, homeownership rights announced their take on the latest efforts to help real estate.

• Loan Limits in high cost areas will be raised to $727,000
• The tax credit will be raised to $8000 with NO payback(see revised 2009 tax credit)
• Interest rates have decreased 125-150 basis points
• The bill has over 50 Billion in foreclosure mitigation
• Treasury Secretary Geitners Plan has another 200-300 billion in governement guarantees of mortgage paper
• Tax Credit on energy efficiency for homeowners up from 10% to 30% for insulation, new windows, new furnances, check with your tax professional before making any purchases.

One of the primary items that the National Association of Realtors lobbies for is the protection of the mortgage interest deduction and real estate tax deduction. So far that has been kept off the table, even though it is estimated that the tax revenue would be in excess of 100 Billion.

From an investors standpoint Fannie Mae has just agreed to allow investors up to 10 properties eligible for Fannie Mae back mortgages.  This increase was from 4 mortgages.

As Realtors, we are constantly keeping up to date on issues that affect you as property owners.  We strongly believe that real estate is the driving force behind the majority of our economy, and real estate is typically the largest investment most individuals have.  At Coldwell Banker Real Estate Now we actively participate in calls, letter and emails to our Congressman to protect your rights.

The highlights of the changes that should be signed by the President on Tuesday are outlined on our site. Before making any decisions about your individual tax situation, you need to talk to a qualified tax professional or CPA.

New Website Launched

Coldwell  Banker Real Estate Now has just launched a new and improved website for the company.  The site includes the ability for the consumer to register and save searches and save favorites to their own personal account.  With the redesign we wanted to make this site a real estate resource for both buyers and sellers, and the general public  in the Jackson TN area.

Several new features include, a new map search, the ability to search for homes thoughout the Multiple Listing Service, view open houses before they even hit the newspaper, and numerous articles to help educate both the buyers and sellers.

Within the new site there is also local area information regarding tax rates, local trustee and tax assessor contact information, as well as several dozen useful links on financing.  We encourage you to come back often to the site as we continually add information pertinent to real estate.  The latest addition is a new summary of the 2009 Tax Credit for first time homebuyers.

You can visit the site at http://www.renow.com

We The People..

As housing goes so goes the economy.

Congress is in the midst of passing a stimulus package that could affect our economy favorably.  The key is they really have no idea as to what affects it will have,  this is a huge experiment on issues they have never seen. 

The housing industry has suffered due to poor regulation and unscrupulous lending practices, as well as greedy corporations.  Make a loan at all cost was their motto.  It didn’t matter if it was fraudulent or not.  There is plenty of blame to go around, from the government, mortgage lenders and banks, Realtors, real estate agents, appraisers, and consumers as well.

The housing industry must rebound for the economy to get back on its feet.  So many ancillary services and products are tied to housing.    Just look at what a house is made up of, lumber, wiring, plumbing, roofing, appliances, carpet, hardwood, and the list goes on and on.   This is the ultimate commodity product. 

Take time to write your congressman as just voting is not letting them know how you feel on issues.  Sit back and your voice will not be heard at all.  You can complain to your neighbor, your family, your friends, but until you regularly let your opinion be known to those that represent us, nothing will change.  Do not let complacency take over.   The schools are a prime example in Jackson, TN.   Good schools attract industry, as they want their employees children to have a good education.   They want their employees to have a safe environment to live.   I do not have any children in the local school systems, and am a resident of Gibson County, but the school system in Madison County affects not only my livelihood, but that of every resident in the surrounding counties. Children or no children.  Houses appreciate because of demand, if there is no demand for our community they will not appreciate.  When the school board elections come, vote for competent individuals based on ability.  There should be a higher voter turnout for this election then the Presidential.  It affects you more.

Let you congressman hear your voice.  One way is to support the National Association of Realtors and National Association of Homebuilders in getting this legislation passed.  Click on the link and learn more about how you can help.  http://www.fixhousingfirst.com/

Sales Associates learn more about helping troubled sellers

Recently 26 Coldwell Banker Real Estate Now agents, attended an in depth seminar in Jackson , on helping home sellers who may be behind in mortgage payments, or now facing the threat of foreclosure.  With the information that they have at their disposal they are able to give hope to some that feel they are in a hopeless situation.  Not every case is the same, but these agents were trained to help walk potential sellers through the process and may be able to help with reducing their payments temporarily, working to renegotiate the terms of the mortgage, or help in the event of a short sale.  The key to this all is time, the sooner a potential troubled seller gets with one of these agents the better.  Mortgage companies typically dont want more homes to sell, and these agents have the information to get you back on your feet.

A short sale(PFS) is where the sales price isnt enough to cover the mortgage balance.  Some sellers instead of letting the home go into foreclosure, can work with these real estate agents on getting out from under the mortgage mess.  Some sellers have a sense on what their home may sell for and think that there is no way to have an agent sell it, since they cant afford one.    This is not the case.  The agents that have had the training will work just as hard to help sellers get out of the current bad situation, so they can move on and live a less stressful life. PFS(Pre-Foreclosure sale).

It is estimated that the knowledge that they have can help up to 40% of those that are in trouble, as not every situation is the same, there is no guarantee that the seller and agent can prevent a foreclosure, but there is a way for some.  To find out more contact one of these agents below to learn more at 668-1777.   Not all agents in the area have the knowledge, so be sure to ask for one of the ones that have had the training.

Sellers need to make sure that if they are in financial trouble with their mortgage that this be shared with the agent they are working with.    The whole process of selling with a real estate professional is a team effort.  The agents that have been trained in this area, know what to ask for and have all the forms necessary to assist you in the process.

The agents that completed the training are Larry Willard, Jean Morgan, Jimmy Ward, Stephanie Freeman, Bob and Fran Beare, Mark Givens, Carla Patey, Tara Skinner, Joyce Henley, Clare Hickey, Amy Dover, Buddy Weir, Lisa Newsom, Joyce and Ray Addison, Kimberly Sarmiento, Tim Jones, Alicia Owens, Peggy Graves, Marilyn Salley, Pam Blasingame, and Blake Ward, all right here in Jackson.

Some sellers feel it is hopeless, but at Coldwell Banker Real Estate Now we are here to give you some hope.

Happy New Year! Closing tidbits from my perspective.

Well 2009 is upon us and the real estate market in Jackson, Tennessee is still here.  We look forward to a robust year in 2009.  Over the last several years we have seen a decline in the number of units sold in the city and county, as well as in the seven county area MLS jurisdiction.  I am still waiting on the final numbers as some agents may have tried to drag some closings into January so final numbers will not be exact for another few days or week.

December results so far are in line with retail: Down.   We typically expect  that 4th quarter sales drop, as historically that is the scenario annually in real estate sales.  Holidays tend to keep people in place and this year has been no different.  Looking forward the Jackson area market should pick up, and early first signs are already showing up.  Buyers are coming out of hibernation, as they well should!  Interest rates still at historic lows, inventory at historic highs, makes this a perfect buyers market.

Astute sellers realize that the market conditions have caused a decrease in home values and are making adjustments to their pricing strategy.  Buyers that jumped in the market over the last 4 years thinking that home prices would skyrocket,  have had a rude awakening.  Home prices in the Jackson, Tennessee area do not typically appreciate in double digit ranges, as in Florida and California.  What these two sister states are experiencing is drastically different then what we see on a local level.  If our home prices dropped in the 6 figure range(as in these 2 states) we would be giving property away in our area.

Although we have seen some small plant closings, layoffs, some anticipated consolidation of manufacturing operations( ie Whirlpool) our employment outlook is still favorable at present.  The only factor that I can see clearly in the decline in home sales for our area has been the negative press that housing took for so many months on the national level.   The media preached gloom and doom for so long that they finally go their wish.    Mortgage companies and lenders,  which also played a major role, have tightened loan qualifications, fly by night mortgage companies have disappeared,  or even changed their names, but money is still available.  Always deal with reputable mortgage lenders.   Dishonest real estate agents played a part in the mortgage meltdown as well.  There is plenty of blame to go around, and hopefully those that took part will get their due.

Agents that jumped into the real estate market, thinking there was quick money to be made have fallen by the wayside.   This is good for buyers and sellers, who want to trust their biggest asset with an ethical and dedicated professional.    Real estate is still a good investment, and unlike investors that were burnt in the stock market declines and scams,  real estate is tangible.  If you buy locally you can drive by and see it, you can live in it and you can enjoy it.   Like any portfolio of investments, don’t put all your eggs in one basket.

The other day I heard on the radio, a great scenario.  You buy a brand new car and drive it off the lot, knowing that it looses value immediately, but then do you quit paying for it? NO.  Some homebuyers are doing just that.  Real estate typically does’nt drop immediately, but if it has structures on it, yes it depreciates every day as it gets older(roof gets older, plumbing, CHA systems,  etc),  it also hopefully appreciates faster then the depreciation and inflation.  What was real estate in Jackson selling for 10 years ago, 20 years ago, 30 years ago?  Noone has ever said real estate was a short term investment.  There are those buyers out there, that try to take advantage of supply, demand, and appreciation. An abundance of those are in California and Florida.   This time they lost.

Again 2009 will hopefully be better then 2008, and at Coldwell Banker Real Estate Now we are optimistic that it will be.  We all hope that you had a Merry Christmas and Happy New Year, and look forward to helping you with all your real estate  needs.  Whether you are moving across town or across the nation, we can help. 

Come back soon and see all the local figures on what housing actually did in 2008.   And look for our launch of our new website soon in 2009.  Wishing you the best in 2009!