FHA MIP going up in 8 days

That's right, in just 8 short business days FHA is increasing the mortgage insurance premium from 1.75% to 2.25%. Although this premium is typically financed into the loan, it wil impact overall monthly mortgage payments due to the increased loan amount. The next shoe to drop from FHA could be an incease in down payments to 5.0%, so now is the time to get an FHA loan with 3.5% down if you are going to be buying a home this Spring or Summer.

USDA money running dry

Today USDA sent out a memo to Texas lenders stating that they anticipate running out of money by the end of April. There is no mention as to when they forsee getting refunded. USDA financing is one of the last, truly, 100% loan options available to buyers in less populated and somewhat rural areas. In Central Texas, these areas include parts of Pflugerville, Leander, Budha, and Bastrop.


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Last Chance for the $8,000 Tax Credit

This may be your last chance to get the $8,000 Tax Credit!

If you are a first time home buyer or if you have not owned a home that you have lived in as your primary residence in the last 3 years, then you are running out of time to take advantage of FREE MONEY from the Federal Government.

I don't care if you don't have the down payment, I don't care if you are just getting out of school, and I don't care what excuse you have, it is $8,000 for free and and there are plenty of options when it comes to how you can get your down payment. If nothing else, buy a house where your monthly payment is the same as what you are paying for in rent. Just Do It! You don't even have to use me as your lender, although that would be nice.

Listen, I have a lot of friends and family that were holding out on refinancing until rates went down to 4.25%. Needless to say, they didn't and probably won't ever again. Rates are still low, but not likely to see the bottom which we experienced a few months ago. The point is, don't wait to see if the government renews the credit, don't hold out because they could raise the credit next year, take what you can get now and be happy that you got something for free (especially since you are paying for it anyway!). Anything that is being discussed right now is pure speculation and the guarantee is that you can be under contract by October of this year and still get the FREE $8,000 if you close before December 1st, 2009. Better yet, you can get the credit 6 to 8 weeks after you close. Get this, the State of Texas will even give you a $6,000 - $7,000 bridge loan that you can use for your down payment. All you have to do is pay it back when you get your $8,000 from the Federal Government.

For more information on this and any other great programs, call me today and I will be happy to share the knowledge with you!

Update - Personal & Business Related

I apologize for not posting anything since August. I cannot believe how much time has passed since my last post. Moreover, I cannot believe the changes that have taken place since July, not only in my industry, but also in my personal life.

My wife and I have had our first child. She was born October 8th and her name is Mara Brandt. I am sure that anyone will understand, we are very proud parents and I am frankly shocked at how much love can be shared in our lives. In addition, I was pleasantly surprised to find out that I could love my wife even more than I had loved her previously. To say that I am a blessed man is an understatement.

With family life thriving and a new understanding of happiness in my personal life, I am back to work and excited about my business and the mortgage business in general. While the past few months have provided many challenges and changes, I have discovered that a few predictions that I made in the past are becoming reality. More specifically, the rise in foreclosure ratings across the country are largely due to defaults on sub prime mortgages that were given to borrowers with poor credit and adjusatble rate mortgages. Couple that with a decrease in property values, for some areas, that reinforces the fact that these buyers could not get out of the situation in which they put themselves in, most unknowingly. I do not wish to assert blame on the buyer solely or on lenders solely. I do wish to state that it is obviously a combination of the two.

The overall real estate market is slumping around the country and the effects are being felt everywhere. In Texas, sales are slower overall, prices remain strong, and in most metropolitan areas prices are still on the rise. Unemployment remains at all time lows with no immediate increase in sight. I think that the most relevant signs of what to expect for real estate to come can be seen from the lack of strength from the U.S. dollar coupled with rising prices, more specifically, "at the pump". These factors are looming very large over the entire economy and will remain a consistent nemesis for the housing market.

On the bright side, real estate in "on sale". You don't need to wait for the after-Christmas sales or New Years sales, in most markets sellers are discounting prices to get out of their homes quickly. Moreover, banks are looking to cut their losses now with hopes to regain profits in late 2008 or early 2009. Now are the times when savvy investors begin to scoop up valuable real estate.

Perhaps a more hidden effect of the "market crunch" is the ability for future homeowners to afford their homes. Lenders are strengthening their guidelines and in nearly all cases, buyers are required to have good credit scores along with some form of a down payment. While some potential homeowners will not qualify as easily as they may have a year ago, it will provide an overall strengthening for future housing markets. Let's face it, we do not want our neighbors to face foreclosure, it will diminish the price of our homes. We do not want neighbors who cannot afford to fix their roofs, or repaint their houses. We would all like neighbors that are responsible, thoughtful, and overall a low risk in all facets of their lives. This creates a sense of goodwill and stability and affords us all the best opportunities. The tightening of standards in my industry is long overdue and is desperately needed. With that being said, I want to thank to those sleazy sub prime lenders, it appears their efforts have paved the way for a better mortgage industry.

Mortgage Industry in Chaos

It has been a few months since my last entry and frankly, there has been more news about my business than I can keep up with. The subprime market has blown up and has all but disappeared, Fannie Mae has restricted its' credit guidelines on their loan offerings, and just today it was announced that Jumbo lenders have increased their base rate for Jumbo loans(those over $417,000) from around 6.875% to 8%. This will shrink up the high dollar home market for the time being, and worst yet, this will happen throughout the entire country, not isolated to those areas with higher foreclosure rates.

What does this mean for the typical buyer?

Not much, the one thing that will hamper the ability of most buyers is the tightening of credit standards by Fannie Mae. If you have border line credit or if you cannot meet normal income requirements, then it has become much more difficult to get a loan. Also, the loan that was created for self-employed individuals, referred to as a "stated income" loan, has practically disappeared. The only loans that have not seen any recent changes or adjustments are the very standard FHA and VA loans. Perhaps the government has proven smarter than most major lending institutions. FHA and VA loans have rarely made any changes to their loan guidelines and when changes do occur, they are typically minor and do not affect the overall credit worthiness of a borrower's qualifications.

In conclusion, keep an ear open and stay focused on the broader economy as these changes will certainly have an impact and will create a ripple affect to the overall economy. If nothing else, these changes will change the overall consumer confidence level. Look for rates to rise across the board and keep an eye out for the Fed's next move. Although they have done nothing to curb the housing woes of late, it just might be the right time now.

What Mayor Winn Knows

The Mayor produced some interesting tidbits about Austin that I thought I would share with you. These are in no particular order.

1. Austin now has 715,000 people and is the 16th largest city in the US.
2. Currently our population is 50% bigger than Atlanta which is the 43rd biggest city.
3. Austin is the youngest big city in the US per capita with 90,000 total college and university students. Over 50,000 at The University of Texas, 33,000 at Austin Community College and the rest spread among the remaining institutions of higher learning.
4. Austin land mass comprises 280 square miles.
5. Austin ranks as the safest big city in the US. In 2006 we had 19 murders. By comparison in 2006 Seattle had 125 murders. In the 1970s when Austin was one third the population it now has we averaged 50 murders a year.
6. 70% of the city's $600 million dollar budget is spent on police, fire and emergency services.
7. Austin is the fastest growing big city in the US. In 1990 were ranked 27th largest city. In 2006 we are ranked 16th.
8. For the past eleven decades --- since 1895 --- Austin has grown EACH year by 3.5% population.
9. That means every 20 years Austin has doubled in population.
10. Mayor Winn sees that as the forecast for our future. A steady 3.5% population growth and that we will once again double in size over the next 20 years.
11. In 2006 we added over 25,000 new jobs.
12. In 2006 the sales tax revenue was up 12% and hotel occupancy was up 25%.
13. Every day 85 new residents are added to Austin. This includes new people moving to town ---- and births / deaths.
14. That equates to 70 more cars on the road each day.
15. Texas is the fastest growing State in the US. Texas adds 500,000 people to the State each year. Austin is the fastest growing city in the fastest growing State in the US. Austin is a very economically attractive location and environment.

16. To manage this growth the Mayor says we need to better manage three things:
A. existing road ways
B. mass transit
C. land use patterns

He sites the new Domain and Mueller Airport projects as the way to better use land patterns. In these projects people will be able to LIVE, WORK, SHOP and EAT ---- without driving. The Mayor believes we will see more projects like this in other areas of the city. In the next few years he sees the same thing happening to the 8,000 acre Robinson Ranch. The Robinson Ranch has been purchased for development. It is the land that surrounds Abbot Labs off of the Loop 1 Toll way. By creating mixed use high density developments that allow people to LIVE, WORK, SHOP, EAT and PLAY close to home ---- he feels the congestion on our roadways will be greatly helped.

Subprime Market Implodes

Are you curious about all of the press that the sub prime mortgage industry has received lately? Well if you are not, you should be. There are changes coming that will impact nearly everyone at some point.

Most of us in the real estate industry have been expecting this debacle, but there are not too many insiders who know what to expect next. The results may become easily predictable if we take a look at similar scenarios in the past. We can expect to see the mortgage industry face the same sort of legislation and government control as the banking industry experienced after the Savings & Loan bust just a few short years ago. That's right, the government will regulate our industry a little more and those companies performing well will feel pressure to tighten guidelines and further make it difficult for people to qualify for mortgages.

Most would say that this constriction is good and well deserved. I would agree for the most part, but I also feel that this will negatively affect some borrowers unintentionally. There will be borrowers who will not qualify for homes under the new restrictions when their current credit profile is stronger than thousands who bought homes within the last ten years. There will far fewer financing options available for self-employed borrowers, and for those hoping for an easier loan process with less paperwork, forget about it.

The winds of change are blowing strong, let's hope they don't blow down the entire real estate market.