The best news for Austin real estate is that mortgage rates lowered again this week.  In fact they hit 60 year lows, a great rate for anyone considering buying Austin real estate.  The bad news is that many potential buyers are still unable to secure a loan, the good news is that if you are in Austin you probably stand a better chance of acquiring a loan because Austin is a leader in employment and the local housing market is much stronger than elsewhere.

The current average interest rate for a 30 year fixed rate home loan is 4.12%.  If you are considering buying Austin real estate and you are employed, have money for a down payment, and have excellent credit then you are in luck.  There could be a better time to be a home buyer in Austin Texas.  A low rate can save a great deal of money over the lifetime of a loan.

The current low rates are directly linked to a poor economy.  Low rates are great for buying real estate, so if you can qualify for a loan you may just want to give us a call today.  An Austin REALTOR® can be an invaluable asset when trying to find the property that best suits your needs.

Click here to read “Mortgage Rates Attain New All-Time Record Lows Again”, from Realty Times.

Contact the Fine Austin Living Team today for up to date information about Austin Texas real estate as well as free access to the Austin Texas MLS and all properties currently for sale in the Austin area.

Understanding points with regards to acquiring a mortgage to buy Austin real estate is easier with a bit of information.  Paying for points on a mortgage is basically making an interest payment up front in order to reduce the interest rate of the loan.  One point is equal to one percent of a loan, and the usage of points can reduce the interest rate of a loan by 1/8 of a percent per point.  In addition there are two types of points, origination points and discount points.

Origination points are charged by the lender to the borrower at closing, and are how a lender gets paid.  Origination points are a one time fee and are very common.  There are situations where a lender might not charge an origination fee but this is more rare than not.

Discount points are points that a borrower pays the lender, representing pre-paid interest.  In effect the lender is making more money up front and the borrower is merely reducing monthly payments but not the amount of the overall loan.  If the main concern on your mind before buying an Austin property is your monthly payment and you have the cash then paying for points could make sense.  On the flip side paying for points can take up cash that may be needed for closing on your new Austin home.

Anyone considering buying Austin real estate and qualifying for a loan is being inundated with a variety of terms and words that could become confusing.  An Austin REALTOR® can be an invaluable resource in locating a reputable lender as well as for sharing information about what you can expect throughout the home buying process.

Contact the Fine Austin Living Team today for up to date information about Austin Texas real estate as well as free access to the Austin Texas MLS and all properties currently for sale in the Austin area.

If you are buying a home in Austin Texas an FHA loan could be the ticket.  There are many misconceptions when it comes to FHA loans.  In a nutshell an FHA loan is a loan which is insured by the Federal Housing Authority, but it is not for low-income families, first-time home buyers, or for inexpensive homes.  An FHA loan could be the option you need to buy Austin Texas real estate.
FHA loan facts:

• There are no income restrictions for FHA loans.
• FHA loans typically have lower interest rates.  Traditional, 30 year fixed mortgages are currently hovering around 4.3%, and FHA loan could be as low as 3.5%.
• FHA loans are for all types of home buyers, not just first time home buyers.
• FHA loan limits can be large, nearing almost $800,000 in value.
• FHA loans can often be transferred to a new home owner when a property is sold.

An FHA loan could be what you need to finance your Austin real estate. Call me today to learn more about buying an Austin home, as well as financing options that might work for you.

Contact Todd Smith today for up to date information about Austin Texas real estate as well as free access to the Austin Texas MLS and all properties currently for sale in the Austin area.

Congratulations to all the graduates!

There was a great article recently on The Columbus (Ohio) Dispatch’s website about an 18-year-old named Lindsay Binegar who pulled the trigger on a purchase many people older than her can’t manage.

She bought a house. And paid cash. The lessons from her story are priceless.

I can’t do the article justice, so I recommend reading it when you get a chance, but the gist of it is that Lindsay started earning money for showing pigs beginning when she was 4 years old. She saved and saved her money, planning on using it for college.

When she started looking at schools, however, her parents offered to pay for college if she stayed near home. So she had her college fund now available to invest. Her father, who runs an auction house, suggested she buy a house at auction.

She paid $40,000 cash for a house, according to the Dispatch article. She spent a little more on new paint and carpet and rented it out to an aunt and uncle.

The first big lesson Lindsay showed is that frugality pays off. How many adults would like to be able to save $40,000 in 14 years? The power of compounding interest – earning interest on your interest – over the years, along with Lindsay’s resisting temptation to spend the money, gave her quite a bit to invest.

Which brings us to the second lesson: Once college was paid for, she didn’t take the money out to buy a new car or a new wardrobe, she invested it. Turning it into a rental property and assuming, conservatively, that she can earn $8,000 a year in cash flow (after taxes and maintenance), she could have her original investment back in just five years.

The last big thing to take away from the story is the fact she took advantage of today’s market, buying a house at auction at a low price and only having to add paint and carpet. Paying cash removes any debt obligation. There are plenty of deals to be had in today’s real estate climate, and she found one PLUS bought it the most ideal way.

If you think about it, this is the way our parents and grandparents became homeowners – they saved and saved and didn’t get in over their heads when they purchased a home. It was the smart, responsible way to own a home.

There’s plenty we can learn from the teenager who did the same thing.

To all the teenagers out there graduating from their respective schools, including my youngest son Wyatt who is graduating from high school, I hope you will glean inspiration from this tale and nurture it for your own measure of success!

Nationwide, April sales of existing homes were up 22.8 percent compared to April 2009, and were up 7.6 percent from March of this year. The driving force behind the jump, of course, was the now-expired tax credits. But another reason to buy is still here: historically low interest rates.

Bankrate.com reported on May 24 that the average for a 30-year, fixed-rate mortgage was 4.87 percent, which is the lowest it’s been in the 30 years that Bankrate has been tracking the figure.

Mortgage rates are tied to U.S. Treasury bond yields, which are low right now because of the financial crisis in Europe.

It’s the best time in our generation to buy,” Moody’s chief economist Mark Zandi told CNBC. “It may be the best time in any generation. Mortgage rates are so low and with homes prices down and lots of inventory, you couldn’t pick a better time to buy or re-finance.”

The extremely low rates won’t last forever – some experts expect about a month, as worries over Europe diminish. Most experts are also calling for strong sales figures for May and June as tax-credit purchases close by the June deadline, then a slowdown in sales as the bump from the credits disappears.

There’s no doubt that some folks have been “on the fence” when it comes to buying a house – despite the first-time home buyer tax credits, bargain prices and rock-bottom interest rates.

A recently released report, however, shows that getting off that fence might be the best move. 

According to a national study conducted by the Associated Press, the gap between the cost of monthly rent payments and monthly mortgage payments is at its lowest point in 20 years. Which means, depending on your perspective, it’s never been more expensive to rent or never been less expensive to own a home in the past two decades.

According to the AP article on the study, the difference between median rent and median house payment in the 45 metropolitan areas surveyed was just $256, the lowest since it sat at $264 in 1993.

In metro areas harder hit by foreclosure, it’s even less of a gap. For instance, owning a home in Detroit might only cost $75 more per month than renting a comparable place. And the gap between renting and buying is closer to $200 in cities such as Cleveland, Orlando, Las Vegas and Atlanta.

When you calculate equity build-up and the tax benefits of owning, it makes you wonder why more people don’t get off the fence.

Of course, this buyer’s market won’t last forever. Prices are showing signs of recovery and interest rates are on the rise. Another interesting tidbit from the AP article: Home prices will rise before rents in most markets, meaning the gap will only be this close for so long.

You might have noticed last week that the Federal Reserve raised the discount rate on loans to banks. To the uninitiated, this might seem like a move that will push mortgage interest rates higher. However, it is not.

Yes, mortgage rates crept up a bit after the announcement, but that was largely a knee-jerk reaction to the news by the mortgage-backed securities market. The discount rate is the rate the Fed charges banks to borrow directly from it. The federal funds rate – which is what banks charge each other and is the real driver of mortgage rates – remains unchanged.

This is does not mean interest rates on home loans will not rise. As part of the federal stimulus package, the Fed has been buying mortgage-backed securities, which has helped keep rates down. But the Fed has warned that it is almost done with the program, and the purchases of mortgage-backed securities could end in March. This means rates could start to rise then.

The Mortgage Bankers Association, in fact, predicts that by June, rates could be a half-a-point higher, and a year from now, rates could be a full percentage point above their current levels.

The bottom line is that rates are at or near historic lows, and are probably set to rise in the next 12 months. But not because of the Fed’s largely symbolic move last week.

Homebuyers shift payment priorities

U.S. News & World Report recently published an article that indicated a pretty dramatic change in the way homeowners are now tackling their debt.

According to the article, a study released by Transunion showed that Americans are increasingly more likely to make payments on their credit cards before payments on their mortgages. The data shows that roughly 6.6 percent of borrowers paid credit cards first in the third quarter of 2009, up from just 4.3 percent in the first quarter of 2008.

This is a shift in the historical norm; which has long been slanted toward house payments as a priority ahead of other bills. Credit the housing bust nationwide for the change.

 As homeowners struggle with unemployment and drops in their homes’ value, they have perhaps become reluctant to commit more money into an asset that might not be worth what they owe on it. Whereas keeping up with credit card payments continues to give them access to necessities such as gas, clothing and groceries.

It also probably signifies part of the issue that caused the housing bust. Access to no-money down or low-down payment loans that proliferated the market during the housing boom allowed buyers to get into homeownership without much “skin in the game.”

In the days of 20-percent down payments, homeownership was something you worked for, saved up for and therefore something you were less likely to give up so easily. It’s a lesson that you can bet banks are heeding.