Recent Federal legislation can impact your closing date. When completing your Purchase Agreement, even if you are prepared to move forward and close quickly, a more conservative timeframe of at least 30-45 days from the time of the contract acceptance would be a more realistic expectation at this time.
Listed below is information on two pieces of legislation that stand to impact your closing date, and a few bullet points that explain the reasoning behind and effects of each measure.
HVCC: Home Valuation Code of Conduct
HVCC was designed to ensure that appraisals are conducted objectively and without pressure from parties with an interest in the transaction. Under HVCC:
• The appraisal and selection of the appraiser will be ordered by someone not directly involved in the origination of the mortgage. This could be either someone else within the mortgage company or a third-party appraisal management company.
• A copy of the appraisal must be provided to the homebuyer/borrower no less than three days before closing.
• The minimum time expectations for receipt of the appraisal should be a few weeks and not days. (While receipt of the appraisal may be received in shorter timeframes, conservative expectations are warranted.)
• Communication between the appraiser and the originating mortgage professional is prohibited. It is imperative that the agents involved in the transaction be prepared at the time of inspection to offer supporting value information if warranted.
HERA: Housing and Economic Recovery Act
HERA was designed to ensure that the borrower(s) involved in the transaction are given accurate disclosure information (Truth in Lending Statement pertaining to Annual Percentage Rate or APR) regarding the loan they are applying for and adequate time to re-evaluate their decision to proceed in the event of any changes that would impact their costs to finance. Under HERA:
• No fees may be collected for the transaction other than those for running a credit report at the initial time of application. Additional fees may be collected only after four business days.
• Should the APR change by more than .125% on a fixed rate loan or .250% on an adjustable rate loan, the lender must disclose the new APR and the borrower must have a minimum of three business days to review the information before the transaction may proceed.
• Items that can trigger re-disclosure requirements include a change(s) in the loan amount, closing date, loan program, any fees that impact the APR or interest rate from the rate indicated on the original loan application.
• In cases where documents are sent by mail to the borrower related to re-disclosure of APR and/or providing a copy of the appraisal, anticipate six business days (three to allow for mailing and three to allow adequate time to review them) before a closing can occur.
Monday, September 21, 2009
Sunday, August 30, 2009
Why Rent: Advantages of Home Ownership
It's staggering when you think about the cost of living, especially if you're a renter and not a home owner. If you are currently paying $1,000 a month for rented housing, over the next three years your property management company will effectively have reaped $36,000 of your hard earned cash. In most cases, you know your rent will go up every year, even if you live in an area that has rent control regulations. You're paying the mortgage for the property owner, when you could be building equity in your own real estate investment.
The tax deductions available to homeowners vary, but there are solid rules the IRS lines out for us. Real estate taxes, mortgage interest, pre-paid interest, and interest on construction loans are all things to take into consideration as tax benefits.
The tax deductions available to homeowners vary, but there are solid rules the IRS lines out for us. Real estate taxes, mortgage interest, pre-paid interest, and interest on construction loans are all things to take into consideration as tax benefits.
Monday, August 24, 2009
Why Austin Remains Strong and Will Recover Early as the Economy Improves
Commentary by:
David Tandy
President, Gracy Title Company
As the Austin Chamber of Commerce recently noted, even though Austin showed a slight job loss in June, compared to other cities, we continue to be the number one city in year-over-year job growth of the Top 50 Metro Areas. Even with Austin’s substantial increase to a 7.1% unemployment rate, we still ranked number three for the lowest unemployment in the Top 50. Austin has several factors which provide a strong foundation for job creation and long-term economic strength:
Highly educated workforce. Not only does Austin and the surrounding area have an amazing 122,000 students enrolled in colleges and universities, but graduates want to stay in the Austin area. The Chamber lists another 300,000 college students within 200 miles of Austin, most of whom also would love to live in Austin when they graduate. In the world of “knowledge workers,” businesses increasingly relocate where they can find a highly educated workforce, or at least companies will create satellite divisions in those markets.
Population growth. The Perryman Group’s latest forecast indicates that the Austin-Round Rock MSA will gain about 75,400 new wage and salary jobs from 2008 to 2013. In June, Bizjournals published their analysis of county-by-county growth patterns within each state, and used that information to predict metropolitan growth at five-year intervals between 2005 and 2025. During this 20-year span, Austin is projected to climb 13 notches from 38th to become the 25th largest metro area in the U.S.
Stable home prices. Despite the drop in the number of MLS transactions, home prices remain strong. While most large markets in the U.S. experienced a substantial increase in home prices from 2001 to 2006, and therefore a substantial decline from 2006 to present (some by as much as 50%), Austin’s single-family median home price has remained amazingly stable.
Austin ranks high as a place to relocate and expand a business. Kiplinger, a D.C.-based publisher of business forecasts and personal finance advice, ranked Austin 8th in its recently released 2009 “Best Places to Live” report. This year’s report emphasized the best cities for work—looking for cities that have stable employment rates in key job areas as well as providing new career opportunities. The report placed a premium on places that will lead the country in employment growth when the recovery takes off. Entrepreneur magazine’s August issue ranks Austin the tenth-best start-up city in America and Forbes ranked Austin number one for economic recovery! The Forbes analysis highlighted the diverse base of business in Austin and projected that the Austin economy will grow by $5 billion by the end of 2010. The Austin Chamber of Commerce has seen a spike in inquiries and company visits. According to the chamber’s data from January 1 through May 31, the Austin region has seen 76 site visits in that time frame from companies looking to relocate. During the same period last year, there were 54 site visits, and in 2007, there were 43.
Austin also benefits from the favorable business climate of Texas. No large state compares when it comes to being business-friendly. Texas was recently named the country's Number One state for business by Directorship, a publication that caters to corporate boardroom leaders. Additionally, the U.S. Department of Commerce named Texas the top exporting state in the nation for the seventh year in a row based on 2008 export data.
Fiscal responsibility. The Economist recently ran a series of articles comparing Texas and California, noting among other things the favorable business climate and low tax rates in Texas. Even more critical was the difference in the budgets of the two states. Of course, California is not the only state running out of money and slashing education and other budgets. The National Conference of State Legislatures recently reported that 11 states raised taxes this year, eight tapped into “Rainy Day” funds and two states relied solely on spending cuts to balance their budgets. Texas was not included in any of these categories. While many large population states were unable to balance their budget this year, Texas remains economically healthy with a balanced budget—an amazing accomplishment in this economic recession. For these reasons and many more, Austin and Texas are in an excellent position to do well when the overall economy begins to recover.
David Tandy
President, Gracy Title Company
As the Austin Chamber of Commerce recently noted, even though Austin showed a slight job loss in June, compared to other cities, we continue to be the number one city in year-over-year job growth of the Top 50 Metro Areas. Even with Austin’s substantial increase to a 7.1% unemployment rate, we still ranked number three for the lowest unemployment in the Top 50. Austin has several factors which provide a strong foundation for job creation and long-term economic strength:
Highly educated workforce. Not only does Austin and the surrounding area have an amazing 122,000 students enrolled in colleges and universities, but graduates want to stay in the Austin area. The Chamber lists another 300,000 college students within 200 miles of Austin, most of whom also would love to live in Austin when they graduate. In the world of “knowledge workers,” businesses increasingly relocate where they can find a highly educated workforce, or at least companies will create satellite divisions in those markets.
Population growth. The Perryman Group’s latest forecast indicates that the Austin-Round Rock MSA will gain about 75,400 new wage and salary jobs from 2008 to 2013. In June, Bizjournals published their analysis of county-by-county growth patterns within each state, and used that information to predict metropolitan growth at five-year intervals between 2005 and 2025. During this 20-year span, Austin is projected to climb 13 notches from 38th to become the 25th largest metro area in the U.S.
Stable home prices. Despite the drop in the number of MLS transactions, home prices remain strong. While most large markets in the U.S. experienced a substantial increase in home prices from 2001 to 2006, and therefore a substantial decline from 2006 to present (some by as much as 50%), Austin’s single-family median home price has remained amazingly stable.
Austin ranks high as a place to relocate and expand a business. Kiplinger, a D.C.-based publisher of business forecasts and personal finance advice, ranked Austin 8th in its recently released 2009 “Best Places to Live” report. This year’s report emphasized the best cities for work—looking for cities that have stable employment rates in key job areas as well as providing new career opportunities. The report placed a premium on places that will lead the country in employment growth when the recovery takes off. Entrepreneur magazine’s August issue ranks Austin the tenth-best start-up city in America and Forbes ranked Austin number one for economic recovery! The Forbes analysis highlighted the diverse base of business in Austin and projected that the Austin economy will grow by $5 billion by the end of 2010. The Austin Chamber of Commerce has seen a spike in inquiries and company visits. According to the chamber’s data from January 1 through May 31, the Austin region has seen 76 site visits in that time frame from companies looking to relocate. During the same period last year, there were 54 site visits, and in 2007, there were 43.
Austin also benefits from the favorable business climate of Texas. No large state compares when it comes to being business-friendly. Texas was recently named the country's Number One state for business by Directorship, a publication that caters to corporate boardroom leaders. Additionally, the U.S. Department of Commerce named Texas the top exporting state in the nation for the seventh year in a row based on 2008 export data.
Fiscal responsibility. The Economist recently ran a series of articles comparing Texas and California, noting among other things the favorable business climate and low tax rates in Texas. Even more critical was the difference in the budgets of the two states. Of course, California is not the only state running out of money and slashing education and other budgets. The National Conference of State Legislatures recently reported that 11 states raised taxes this year, eight tapped into “Rainy Day” funds and two states relied solely on spending cuts to balance their budgets. Texas was not included in any of these categories. While many large population states were unable to balance their budget this year, Texas remains economically healthy with a balanced budget—an amazing accomplishment in this economic recession. For these reasons and many more, Austin and Texas are in an excellent position to do well when the overall economy begins to recover.
Thursday, August 6, 2009
Austin Market Misc.
The Austin real estate market, along with a number of other cities in the state of Texas, was hit quite hard by the economic recession. Austin, along with every other large city in the United States, is composed of residential and commercial sectors of real estate, which are affected in different ways by adverse economic situations. It appears that the Austin real estate market has experienced a divergence between the status of the commercial real estate market and residential real estate market, with the former trending upwards and the latter moving downwards. It also appears somewhat confusing because of the interactive effects of the different parts of the market, such as the artificial inflation of sales statistics by foreclosures.
According to a July 21, 2009 article in the American-Statesman, home sales in the Austin real estate market reached their highest levels in an entire year. The piece, written by Claudia Grisales, “Austin-area sales of existing homes hit the highest level in a year last month, according to figures Monday from the Austin Board of Realtors. Last month, 2,135 single-family homes were sold in the area, down 4 percent from a year earlier. That was the smallest decline since a 2 percent drop in July 2007, when the market began to soften amid an emerging national mortgage crisis.” A July 20, 2009 article in the Austin Business Journal added that “The year over year sales volume gap is shrinking each month, according to a report from the Austin Board of Realtors.”
Another article in the Austin Business Journal found that “Austin area residential foreclosure postings for the upcoming August auction are at their lowest level in five months.” Simply put, the residential portion of Austin real estate is in slowly improving shape, thanks to a number of local efforts, federal bills, and the natural ebb and flow of the market. On the other hand, a July 14th article stated that “Foreclosure postings filed on commercial real estate for January through July foreclosure auctions in the Austin metro area jumped 139 percent over the same time period last year, according to data from Addison-based Foreclosure Listing Service Inc.”
According to a July 21, 2009 article in the American-Statesman, home sales in the Austin real estate market reached their highest levels in an entire year. The piece, written by Claudia Grisales, “Austin-area sales of existing homes hit the highest level in a year last month, according to figures Monday from the Austin Board of Realtors. Last month, 2,135 single-family homes were sold in the area, down 4 percent from a year earlier. That was the smallest decline since a 2 percent drop in July 2007, when the market began to soften amid an emerging national mortgage crisis.” A July 20, 2009 article in the Austin Business Journal added that “The year over year sales volume gap is shrinking each month, according to a report from the Austin Board of Realtors.”
Another article in the Austin Business Journal found that “Austin area residential foreclosure postings for the upcoming August auction are at their lowest level in five months.” Simply put, the residential portion of Austin real estate is in slowly improving shape, thanks to a number of local efforts, federal bills, and the natural ebb and flow of the market. On the other hand, a July 14th article stated that “Foreclosure postings filed on commercial real estate for January through July foreclosure auctions in the Austin metro area jumped 139 percent over the same time period last year, according to data from Addison-based Foreclosure Listing Service Inc.”
Tuesday, August 4, 2009
Monday, July 6, 2009
Month In Review - June 2009
Units for Sale: (compared to June 2008)
New listings were down 22.82%.
Pendings were up 4.09%.
Solds decreased by 8.10%.
As for Average Prices:
The "New Listings" average list price is down 1.02% to 312,793. In June 2008 the average list price was $316,001.
Sold average sales prices decreased 7.52% to $247,041. For June 2008 it was $267,130.
DID YOU KNOW?
That we had 12,711 active listings during the same week in 2008? Today there is 11,603 active listings! That is 8.72% decrease from last year.
New listings were down 22.82%.
Pendings were up 4.09%.
Solds decreased by 8.10%.
As for Average Prices:
The "New Listings" average list price is down 1.02% to 312,793. In June 2008 the average list price was $316,001.
Sold average sales prices decreased 7.52% to $247,041. For June 2008 it was $267,130.
DID YOU KNOW?
That we had 12,711 active listings during the same week in 2008? Today there is 11,603 active listings! That is 8.72% decrease from last year.
Mortgage Interest Rate Myths
This may come as a shock to many borrowers, but it's absolutely true. Mortgage interest rates are not set by the Federal Reserve and, contrary to popular belief, mortgage rates are not directly tied to the yields of US Treasury bills, bonds, or notes – including the 10-year Treasury Note. That's right. Despite what you might hear in the media, mortgage interest rates are actually set by lending institutions, and are based solely on the performance of mortgage-backed securities.
For years now, the media and inexperienced loan officers everywhere have suggested that the 10-year Treasury Note, a government-backed security, is directly tied to mortgage interest rates, that the two are separated by a specific interval – which is simply not true. The graph on this page, which shows interest rates for 30-year fixed-rate mortgages and the yield for the 10-year Treasury Note for 13 months, clearly demonstrates this fact.
At a quick glance, yes, it's easy to see why the mistake is made. As you can see, for 11 out of the 13 months recorded in the graph, the yield of the 10-year Treasury Note and interest rates for 30-year fixed-rate mortgages did follow a somewhat similar long-term path, despite obvious short-term divergences. However, take a closer look at the drastic change that occurs from January through March 2008. What's interesting about this graph is that, during this period, the Federal Reserve had cut interest rates six times, from September 2007, to March 2008, and yet mortgage rates were actually higher in March 2008 than they were a year before. Not only does this demonstrate that the yield of the 10-year Treasury Note is not pegged to mortgage interest rates, it also reveals that mortgage interest rates are not set by the Fed either.
For years now, the media and inexperienced loan officers everywhere have suggested that the 10-year Treasury Note, a government-backed security, is directly tied to mortgage interest rates, that the two are separated by a specific interval – which is simply not true. The graph on this page, which shows interest rates for 30-year fixed-rate mortgages and the yield for the 10-year Treasury Note for 13 months, clearly demonstrates this fact.
At a quick glance, yes, it's easy to see why the mistake is made. As you can see, for 11 out of the 13 months recorded in the graph, the yield of the 10-year Treasury Note and interest rates for 30-year fixed-rate mortgages did follow a somewhat similar long-term path, despite obvious short-term divergences. However, take a closer look at the drastic change that occurs from January through March 2008. What's interesting about this graph is that, during this period, the Federal Reserve had cut interest rates six times, from September 2007, to March 2008, and yet mortgage rates were actually higher in March 2008 than they were a year before. Not only does this demonstrate that the yield of the 10-year Treasury Note is not pegged to mortgage interest rates, it also reveals that mortgage interest rates are not set by the Fed either.
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