Friday, August 1, 2008
Friday, July 11, 2008
New Housing Dynamic - Pt 2
The first person I would like to address in what I called in my last blog the “New Housing Dynamic”, is the home buyer. Without the buyer we have nothing. You can have all of the sellers you want, a million real estate agents, a million loan officers, a million appraisers etc etc etc but without the buyer we are all like an SUV plant in 2008, useless and not producing a thing. Hey that could be a new joke...how are a subprime lender in 2008 and a SUV plant in 2008 alike? Both are gone for good! Okay my comedy days are over. Sorry, back to the buyer.
What has changed about or for buyers in this new real estate dynamic? Well it isn’t the availability of homes, there are still tons out there for them to choose from. Prices aren’t too high (anymore) in fact if you ask a lot of sellers they are to low. There is a ton of capital, as in money, available for them to borrow. So what has changed? Well let’s go back to the money thing again. There is plenty of money available for qualified buyers. What was that? Ahhhh qualified…..there is the “New Dynamic”. Let’s take a look at it.
The loans officers I normally work with have always talked about loan criteria being the four C’s. These four C’s represent character, capacity, collateral and capital. In other words does the potential buyer have a good credit score (character), capacity (income/job), collateral (did the house appraise) and capital (down payment). As we all know in the past few years you probably could have gotten a loan with only a passing grade in two of the four C’s or in some cases only one passing grade. If you said you had a job and a dollar in change in your pocket you got a loan. Don’t laugh. You know it’s true. Well I have changed the name of the four C’s. That is no longer a valid term in the “New Real Estate Dynamic”. The proper term for that same financing test is now ACID. That’s right the ACID test. ACID stands for A=appraisal, C=credit score/report, I=income, D=down payment. Starting today let’s call it what it really is and that is the ACID test. If our buyers do not pass the ACID test there is no sense in driving them around in our new scaled down vehicles wasting our $4.00+ gallon gas trying to find their dream home if they cannot get the mortgage. It is not worth the gas or the buyer’s time or the agent’s time. The ACID test must be passed first. Some agents will say I did that in the past and that is true. However, at the same time there were a lot of agents who found the buyer’s dream home first and then worried about the mortgage later since they knew that mortgages were easily had.
So now what? If the buyers do not pass the ACID test they should just walk away with their unfulfilled dreams of home ownership and the agents let them do that? NO! WRONG! In my opinion agents, if they are true professionals, should have a team behind them. One of the major team members they should NOW have on their team is a credit improvement specialist. Buyers should expect agents to assist them in ALL aspects of obtaining their dreams home ownership. Professional agents are not just chauffeurs driving buyers around. They truly never have been but the “New Dynamic” is making that more obvious than ever. Real estate professionals should have all of the resources available to assist buyers. As evidenced by a recent NAR survey almost 75% of buyers want all real estate related services under one roof. Agents need to understand and provide that. This credit restoration/improvement specialist can help with both the C and D in our ACID test. They can help with improving credit scores and through this mechanism allow the buyer to reduce their cash outflow by refinancing auto loans and credit cards to lower interest rates. It can and must be done. It is part of the “New Housing Dynamic”. I could go on and on about lower PMI, lower mortgage interest rates lower this and lower that, that is associated with credit improvement but my fingers would get to tired of doing all of that typing.
There are plenty of people with the dream of home ownership. There are plenty of people who dream of and need a bigger home. One of the new jobs of the agent in our “New Housing Dynamic” is to show these potential buyers how to fulfill their dreams. A helpful link is shown below.
More on the “New Housing Dynamic” next week. Have a great weekend.
Ron
What has changed about or for buyers in this new real estate dynamic? Well it isn’t the availability of homes, there are still tons out there for them to choose from. Prices aren’t too high (anymore) in fact if you ask a lot of sellers they are to low. There is a ton of capital, as in money, available for them to borrow. So what has changed? Well let’s go back to the money thing again. There is plenty of money available for qualified buyers. What was that? Ahhhh qualified…..there is the “New Dynamic”. Let’s take a look at it.
The loans officers I normally work with have always talked about loan criteria being the four C’s. These four C’s represent character, capacity, collateral and capital. In other words does the potential buyer have a good credit score (character), capacity (income/job), collateral (did the house appraise) and capital (down payment). As we all know in the past few years you probably could have gotten a loan with only a passing grade in two of the four C’s or in some cases only one passing grade. If you said you had a job and a dollar in change in your pocket you got a loan. Don’t laugh. You know it’s true. Well I have changed the name of the four C’s. That is no longer a valid term in the “New Real Estate Dynamic”. The proper term for that same financing test is now ACID. That’s right the ACID test. ACID stands for A=appraisal, C=credit score/report, I=income, D=down payment. Starting today let’s call it what it really is and that is the ACID test. If our buyers do not pass the ACID test there is no sense in driving them around in our new scaled down vehicles wasting our $4.00+ gallon gas trying to find their dream home if they cannot get the mortgage. It is not worth the gas or the buyer’s time or the agent’s time. The ACID test must be passed first. Some agents will say I did that in the past and that is true. However, at the same time there were a lot of agents who found the buyer’s dream home first and then worried about the mortgage later since they knew that mortgages were easily had.
So now what? If the buyers do not pass the ACID test they should just walk away with their unfulfilled dreams of home ownership and the agents let them do that? NO! WRONG! In my opinion agents, if they are true professionals, should have a team behind them. One of the major team members they should NOW have on their team is a credit improvement specialist. Buyers should expect agents to assist them in ALL aspects of obtaining their dreams home ownership. Professional agents are not just chauffeurs driving buyers around. They truly never have been but the “New Dynamic” is making that more obvious than ever. Real estate professionals should have all of the resources available to assist buyers. As evidenced by a recent NAR survey almost 75% of buyers want all real estate related services under one roof. Agents need to understand and provide that. This credit restoration/improvement specialist can help with both the C and D in our ACID test. They can help with improving credit scores and through this mechanism allow the buyer to reduce their cash outflow by refinancing auto loans and credit cards to lower interest rates. It can and must be done. It is part of the “New Housing Dynamic”. I could go on and on about lower PMI, lower mortgage interest rates lower this and lower that, that is associated with credit improvement but my fingers would get to tired of doing all of that typing.
There are plenty of people with the dream of home ownership. There are plenty of people who dream of and need a bigger home. One of the new jobs of the agent in our “New Housing Dynamic” is to show these potential buyers how to fulfill their dreams. A helpful link is shown below.
More on the “New Housing Dynamic” next week. Have a great weekend.
Ron
Wednesday, July 9, 2008
New Housing Dynamic - pt 1
In the past two weeks we have been flooded with news about mortgages, home ownership, the four keys to our housing market recovery, more foreclosures to come and a ton of other housing related news. Let’s take a moment to review some of this news.
Ben Bernanke, Chairman of the Federal Reserve System said that new rules are coming for lenders. These new rules will prevent “shady” mortgages and provide better protection for the borrower and ultimately result in fewer home loans being made. Henry Paulson, Jr., Secretary of the Treasury said that there is no way to prevent a lot of foreclosures from happening because the borrowers involved should never have been given mortgages in the first place. Congress is close to passing the mortgage rescue bill and the Joint Center for Housing Studies at Harvard University said we were in the worst housing market in 50 years. Credit card companies are reducing credit limits thus lowering credit scores and making fewer people eligible for mortgages. Combine these tidbits with what has been called the “new affordability” for large tract home builders and we are faced with a large amount of information to digest. When I first read all of this material I was left with a severe case of “housing” indigestion. My medicine cabinet held no relief for this type of sickness. The same type sickness that affects our real estate market today.
So what does all this mean? I believe it means that there is a new real estate dynamic evolving; a new housing dynamic that is already here, but not realized nor understood by most of us. A new housing dynamic that will affect current and future homes buyers and sellers, mortgage brokers and bankers, real estate agents, credit restoration/improvement specialists, home builders, real estate investors and just about everyone else involved in the real estate transaction chain.
What I am going to attempt to do over my next few blogs is examine this possible new dynamic and explore the possible affects it will have on all of us. I will title “New Housing Dynamic – Pt ?” with the question mark representing the number of the blog in the series. I firmly believe that the new housing dynamic has arrived. It is time that all of us, from agents, to buyers to sellers, wake up to this fact, address it, and adjust to it. It will have a profound affect on all of us now only now but in the future also.
I look forward to hearing from all of you on this matter.
Have a great day!
Ron
Ben Bernanke, Chairman of the Federal Reserve System said that new rules are coming for lenders. These new rules will prevent “shady” mortgages and provide better protection for the borrower and ultimately result in fewer home loans being made. Henry Paulson, Jr., Secretary of the Treasury said that there is no way to prevent a lot of foreclosures from happening because the borrowers involved should never have been given mortgages in the first place. Congress is close to passing the mortgage rescue bill and the Joint Center for Housing Studies at Harvard University said we were in the worst housing market in 50 years. Credit card companies are reducing credit limits thus lowering credit scores and making fewer people eligible for mortgages. Combine these tidbits with what has been called the “new affordability” for large tract home builders and we are faced with a large amount of information to digest. When I first read all of this material I was left with a severe case of “housing” indigestion. My medicine cabinet held no relief for this type of sickness. The same type sickness that affects our real estate market today.
So what does all this mean? I believe it means that there is a new real estate dynamic evolving; a new housing dynamic that is already here, but not realized nor understood by most of us. A new housing dynamic that will affect current and future homes buyers and sellers, mortgage brokers and bankers, real estate agents, credit restoration/improvement specialists, home builders, real estate investors and just about everyone else involved in the real estate transaction chain.
What I am going to attempt to do over my next few blogs is examine this possible new dynamic and explore the possible affects it will have on all of us. I will title “New Housing Dynamic – Pt ?” with the question mark representing the number of the blog in the series. I firmly believe that the new housing dynamic has arrived. It is time that all of us, from agents, to buyers to sellers, wake up to this fact, address it, and adjust to it. It will have a profound affect on all of us now only now but in the future also.
I look forward to hearing from all of you on this matter.
Have a great day!
Ron
Credit Scoring
As some of you know besides being a full time real estate agent I also represent a national membership organization that assists consumers with credit improvement and restoration. In doing some research on how credit scores are calculated I found and interesting article from the Electronic Privacy information Center on the subject. It makes for some great short reading and as it did for me may open your eyes to what really goes on with your credit scores. It is not as many of us think just about paying your bills on time. According to the article about 100 different things that are actually used in calculating your scores. If you get a moment please read the article. If you have any questions please drop me an email.
Have a good day.
Ron
http://epic.org/privacy/creditscoring/
Have a good day.
Ron
http://epic.org/privacy/creditscoring/
Texas Veterans - interest rates
The new interest rates for loans through the Texas Veterans Land Board for this week are as follows:
5.93% Base Rate applies to all loans with a term greater than 15 years.
Available Discounts to Base Rate*Discount for loans with a term of 15 years or less: -.25%Qualified Veterans with Disabilities Program Discount: -.35%Qualified Service Era Discount (Restricted Pool): -1.47%
Great rates once again by the board. Please email me if you have any questions and please call me so that I may help you look for a home. Have a great day. View the Texas Veterans Land Board website by clikcing the link below.
Ron
http://www.glo.state.tx.us/vlb/
5.93% Base Rate applies to all loans with a term greater than 15 years.
Available Discounts to Base Rate*Discount for loans with a term of 15 years or less: -.25%Qualified Veterans with Disabilities Program Discount: -.35%Qualified Service Era Discount (Restricted Pool): -1.47%
Great rates once again by the board. Please email me if you have any questions and please call me so that I may help you look for a home. Have a great day. View the Texas Veterans Land Board website by clikcing the link below.
Ron
http://www.glo.state.tx.us/vlb/
Tuesday, July 1, 2008
Is it to early to say Bah Humbug?? Yes, sales were down again in Montgomery County. The results for May, 2008 versus 2007 and 2006 are shown below. Our year-to-date sales are down almost 19% (gag). Yet even with the decline in sales the average sales price continues to increase. (All Right!) Needless to say it is a unique situation. We appear to be in the exact opposite situation of California where sales increased and prices declined. As you can see all real estate, like politics, is local. If you have any question about what MLS area you are in please send me an email. I will be more than happy to provide you with all of the information I can.
When will the situation change? I really do not have the foggiest idea. What do I hope? That those buyers sitting on the fence will change their minds and quickly. Interest rates are RISING. Just the other day a well respected news website said now is the best time to buy as interest rates should continue to rise and prices may have well bottomed out. Now would be a good time to call your friendly mortgage banker. If you don't have one please let me now and I will send you some names.
Take a look at the numbers below.....try not to gag....tell your neighbors to buy now...take two advil and email me in the morning. Have a great week.
When will the situation change? I really do not have the foggiest idea. What do I hope? That those buyers sitting on the fence will change their minds and quickly. Interest rates are RISING. Just the other day a well respected news website said now is the best time to buy as interest rates should continue to rise and prices may have well bottomed out. Now would be a good time to call your friendly mortgage banker. If you don't have one please let me now and I will send you some names.
Take a look at the numbers below.....try not to gag....tell your neighbors to buy now...take two advil and email me in the morning. Have a great week.
Ron
Interest rates - weekly
Here are this week's interest rates for Texas veterans eligible for loans from the Texas Veterans Land Board.
Base rate: 5.95%
Discount for 15 year loan or less:<.25%>
Disabilities discount: <.35%>
Service era discount <1.49%>
If you have any questions please send me an email or visit the website shown below.
www.texasveterans.com
Thanks and have a great day!
Ron
Base rate: 5.95%
Discount for 15 year loan or less:<.25%>
Disabilities discount: <.35%>
Service era discount <1.49%>
If you have any questions please send me an email or visit the website shown below.
www.texasveterans.com
Thanks and have a great day!
Ron
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