Katy neighbors:  Shopping for a home? About to start house hunting? Now is better than later! Mortgage rates are destined to rise in the near future.  Predictions are that rates may go up to 6% by April. While this sounds high, please remember it is still very low considering historical data. When I started selling Katy real estate in 1989, interest rates were barely below 20%!

Normally, I don’t write articles explaining why rates are fluctuating. If you are like me, you just want to know what the rate is today. However, a recent change will  raise rates and we will also probably see them continue to increase in the future.

The Fed has raised the “discount rate” from .5% to .75%. The discount rate is the the rate at which banks borrow money; so, this move will cause mortgage rates to increase.

This government is no longer focusing on keeping mortgage rates down. This move, on top of their decision to cut back the amount of mortgages they buy, proves this.

Furthermore, the Fed is planning on ending their Mortgage Back Securities purchase program in April.  Through this plan, the Federal government has been stimulating  interest rates to remain low.

Here is a great article to read on the topic.

Don’t forget the $8000 First Time Homebuyers Tax Credit and the $6500 Current Homeowner’s Tax Credit. To take advantage of these programs, you must be under contract by the end of April and close by the end of June.

Call me at 713-818-2404 for more information. Let’s get out there and find your dream home now!

The home purchasing tax credit is not just for first-time homebuyers any more. There’s a new program for the current homeowner or someone who has owned a home five years out of the last eight. Following are the highlights of the program:

To be eligible to claim the tax credit, buyers must have owned and lived in their previous home for five consecutive years out of the last eight.

The tax credit does not have to be repaid.

The tax credit is equal to 10% of the home’s purchase price up to a maximum of $6,500.

The tax credit applies only to homes priced at $800,000 or less.

The credit is available for homes purchased after November 6, 2009 and on or before April 30, 2010.

In cases where a binding sales contract is signed by May 1, 2010, the home purchase qualifies provided it closes prior to July 1, 2010. This allows a buyer to purchase new construction.

Single taxpayers with incomes up to $125,000 and married couples with incomes up to $225,000 qualify for the full tax credit.

For more information and to be directed to a lender who is knowledgeable about the $6,500 tax credit program, contact me at 713-818-2404 or via FuellingKaty.com.

As we talked about in Part One of this series:  Don’t Buy a House Without One!, unless you purchase a business, your home will be your largest financial investment. For this reason, whether you are buying new construction or resale, it is highly advantageous to avail yourself of Buyers Representation.

There is no fee for this service. It won’t cost you anything and will put you in a much stronger negotiating stance. Invariably, you will save money. There’s nothing to lose!

That said, it’s imperative that you partner with a true Buyer’s Representative and have a written agreement between you. This Buyer’s Rep Agreement binds the Realtor to your interests and your interests only. In addition to many other services, by the existence of this agreement, you will become privy to data and area statistics that you cannot access on your own.

It may matter more who personally represents you when buying a house than which house you may attempt to purchase. If you try to buy the right home through the wrong agent, you may not get the home you want. Even worse, you may pay too much!

Following are the services you should “demand” from a Buyer’s Agent. They are taken from my own personal service commitment. Of course, I would love to work with you and share my 20-plus years professional experience in Katy real estate; however, if you choose someone else, make sure they, too, offer you these services (in writing):

Provide a complete explanation of the home buying process.

Provide thorough knowledge of the current and emerging real estate market conditions.

Assist you in selecting the best home for you, for your money.

Write your purchase agreement to correctly and clearly express your intentions and represent your interests.

Submit your purchase agreement in a manner that will present you in the most favorable position.

Review all counter-offers in detail and provide negotiation representation of your interests.

Provide assistance in obtaining the best possible financing for your next home.

Coordinate the closing of your purchase with other Realtors, lenders, inspectors, appraisers, attorneys, escrow officers and title insurance companies.

Provide on-going personal communication to keep you informed on the step-by-step progress of the purchase of your home.

Provide post-sale follow-up to assure your total satisfaction.

For information about Katy area homes, you can search the entire Houston MLS from my blog, FuellingKaty.com. For questions or to tour any area homes, contact me directly at 713-818-2404. I have specialized in Katy real estate for over 20 years. Experience does count!

Buying a home is no small matter. Besides being the largest financial transaction you may ever undertake, it’s probably also the most complex. There are many good reasons to work with a qualified real estate professional—especially a trained professional who offers Buyers Agency.

When you avail yourself of a Buyers Agent,  you’ll be served, not sold. Your interests become their interests. Simply stated, a Buyers Agent exclusively represents your interests  during the home buying process.

This Realtor is able to share with you information that you cannot access through MLS or the tax records, information that will help you ascertain fair market value for any house.  Whether buying a resale house or new construction, it is very important to have professional representation.

Best of all, there is absolutely no charge to take advantage of these services! You just have to have a Buyers Representation Agreement– paperwork binding your Realtor to you in a Buyers Agency relationship.

To save you time, minimize your stress, provide maximum security and help assure you get the best home for your money, make sure you work with a Buyers Representative.

In Part Two of this article, I will outline the specific services you should expect from a Buyers Agent. If you are interested in discussing Buyers Representation, with no obligation, feel free to call me at 713-818-2404.

According to the National Association of Realtors, the following data reflects 2008 real estate statistics. Data for 2009 will not be available until the fall of 2010.

• Among both first-time and repeat buyers, single female buyers are nearly twice the share of single male buyers.
• Among first-time buyers the share of single female buyers was 25 percent, and the share was 17 percent among repeat buyers.

• Married couples are the most common household type among home buyers. They are nearly half of all first-time buyers, and they are more than two-thirds of repeat buyers.
• First-time buyers are typically younger than repeat buyers. More than half of first-time buyers were between 25 and 34 years of age.

• According to the Home Mortgage Disclosure Act data (HMDA), the median income of homebuyers using mortgage financing was $71,600 in 2008.
• Median income of primary homebuyers was $67,900, and that of vacation/investment home buyers was $118,100.

Recently described by Southern Living as “one of the most fascinating neighborhoods in the South’s biggest city,” the Heights will be the scene of the 2009 Houston Heights Holiday Home Tour on Friday, December 4, 6:00 pm – 9:00 p.m., and Saturday, December 5, 3:00 pm – 9:00 pm.

The tour will feature seven spectacular homes delightfully decorated for the holidays. Docents will be stationed at each home to point out the rich history, architectural features, furnishings, and decorations.

A special “holiday bundle” — 10 tickets for $150 — can be purchased online only until noon on December 3.

Individual advance tickets are $17 and can also be purchased online; they will be available soon at various Heights locations. Tickets purchased online can be picked up at the will-call booth at the Fire Station during the tour. Tickets purchased on the days of the tour will cost $20, or $5 for each home, and will be available at the Heights Fire Station at 107 W. 12th and Yale Streets, and at each home. Tickets will be available mid-November.

Three buses will operate during the tour on Friday and Saturday. Patrons may board the buses at stops located at each home and at the Fire Station.

December 4 and 5

If you’ve been following the news this week, you know that there’s quite a debate shaping up, over the $8000 tax credit. The credit — for first time homebuyers and people who haven’t owned a home for at least three years — is due to expire November 30th.

There will be an important vote in the Senate this week on the housing tax credit provision, The Dodd-Lieberman-Isakson amendment would extend the tax credit to June 30 2010. It would expand the credit to any homebuyer and raise the income limits to $150,ooo ($300,000 for joint returns.) The amount of the tax credit would remain at $8,000.

And as that deadline draws closer, the voices are growing louder. Some calling for an extension, so more buyers can get the credit, and a new home. Others calling for the program to end on schedule, saying we can’t afford to add any more to the nation’s deficits.

Let’s take a look at that debate, and what each side has to say:

The Washington Post recommends ending the tax credit for good, on November 30th. Their editorial reads, in part:

“…the housing credit does not magically generate demand. It moves demand around — from the future to the present, and from other consumers, and other sectors, to homebuyers and homes…” “Congress should end this program while it still can. With hundreds of billions of dollars in support from the Fed, the Treasury and the FHA still in place, the housing market can survive without it.”

On the other side of the issue: an opinion piece in American Banker says the credit should be extended past November 30th, and also, expanded to help more homebuyers! Here’s what they wrote:

“…In deciding to extend and expand the first-time homebuyer tax credit, policymakers must consider more widely the bigger picture of homeownership and its enormously positive effects on the economy. Only this will lead to a comprehensive healing of America’s real estate system.”

USA Today ran two opinion pieces on the tax credit…one pro, one con! Here’s an excerpt from the ‘pro’ column:

“…Expanding the tax credit would accelerate the recovery by stimulating demand among “move up” buyers, existing home buyers who want or need a larger house. This would spur buying and price stability in a new segment of the housing market, further accelerating an economic and housing recovery…”

And, the piece they ran against extending the credit, reads in part:

“…tax credits are just another form of government spending, and the government — which is running a $1.6 trillion deficit this year — doesn’t have any money to spend. Extending the credit, which has already cost as much as $15 billion, would mean borrowing even more from future generations to aid today’s home buyers…”

And as the voices grew louder, and the debate more robust, the NATIONAL ASSOCIATION OF REALTORS® weighed in. Here’s what its President, Charles McMillan had to say:

“…unlike the 700 billion bailout of Wall Street and Banks, the housing tax credit puts cash in the hands of financially healthy home buyers and helps stabilize home prices…”

“…Congress should extend the tax credit through 2010. This will give the market time to clear away excess inventory,, which will help stabilize home prices. That in turn will rekindle consumer confidence in the economy, and the housing market.”

Prospects are good for extension of the tax credit. There is a real concern in the Administration about the strength of the economic recovery. Treasury Secretary Geithner was quoted in the November 2nd issue of Business Week stating, “We’re not going to make the mistake many countries made in the passt of putting the brakes on too early and creating the risk of a weaker recovery with even higher levels of unemployment.”

On the negative side, the stories about fraud in the tax credit program and concerns about the cost are legitimate, too.

While the industry trade organizations are making a major push for the expansion of the tax credit to all homeowners, it appears unlikely that it will be expanded beyond first-time homebuyers.

Over the last six months, there has been some volatility in the real estate market in Zip Code 77450 as we shall see by looking at key statistics. Prices peaked in late June and have been in a decline ever since. The average price in June was $232,000 while now it’s $216,000. See the chart at left.

The days a property stays on the market before it has a contract negotiated is another key indicator of the health of a real estate market. As you can see above, the longest days on the market occurred in June with a steep decline beginning immediately after the peak. After a strong decline, days on the market began to rise again in September and continues to move in an upward path. This is not unusual as we enter the fall market.

How much inventory is available and how does this impact the health of the real estate market? This is called the absorption rate; for an in-depth explanation of absorption rates see my blog: FuellingKaty.com.

Inventory in 77450 has been steadily declining since late June. From a high of 359 houses on the market we now find only 228 houses for sale.

For detailed statistics on Zip Code 77449, see FuellingKaty.com.

If you would like a detailed report on your home and it’s value, contact me and I will be happy to prepare a comparative market analysis for you.

There is a new loan program aimed at assisting teachers, police officers, firemen, EMS personnel, correction officers, school nurses, teacher’s aides, librarians, school counselors and county jailers to purchase a home.

This program is not for investors but for those who will purchase and occupy a home for at least nine years.

It’s a home buying program specifically designed to save money for public servants resulting in an annual, not to exceed, $2000 tax credit for the life of the loan!

The Mortgage Credit Certificate allows the homebuyer, if there is a tax liability, the benefit of a dollar-for-dollar reduction of their tax bill.

The program enables the homeowner to claim a tax credit of 35% of annual interest paid, not to exceed $2000 per-year, for the life of the loan.

The Mortgage Credit Certificate allows the lender to qualify for more home or to get approved if they have been denied in the past.

The homebuyer can combine the Mortgage Credit Certificate program with the current first-time home buyer’s $8,000 tax credit resulting in a a credit saving of $10,000 in 2009!

The $8,000 tax credit program expires on November 30, 2009 so it is important to buy your home prior to that date. If you act quickly, there is still time to shop for and close on a home. Call me for details.

With low interest rates and the $8000 tax rebate program, there has never been a better time to become a home owner!

If the Mortgage Credit Certificate borrower sells his house within nine years, makes a profit and if his income has greatly increased, the homeowner would have to pay back a % depending on what year he sells.  The penalty decreases every year.

For more details and to be referred to a Mortgage Credit Certificate lender, contact me @ 713-818-2404.

You want to buy a home. Your Realtor says, “The very first thing you need to do is talk to a loan officer and see what you can borrow. Get pre-qualified for a mortgage.” Or, maybe she says to get “pre-approved”.

Here starts the confusion. What is the difference between “pre-qualification” and “pre-approval”? Bewildering terms, to be sure.

They are similar processes but not the same, not at all. One, pre-qualification, yields a gross estimate while pre-approval gives more definitive information. The difference is that pre-qualification is a mere estimate of what you might be able to borrow. Pre-approval is conditional proof of loan approval. Pre-approvals are powerful to have in negotiations while pre-qualifications are often grossly inaccurate and, this being known to Realtors, are not given special consideration when attempting to buy a home.

Any savvy Realtor will advise their sellers to more seriously consider a buyer that is actually pre-approved. Pre-approval is a phenomenally powerful tool to have in negotiations. It can put you way ahead of other offers. In this economic client, where mortgages can be hard to come by, pre-approval is the way you want to go!

The pre-qualification process takes a very short time; it’s usually available within a few hours. It’s based on what you provide to a lender, usually verbally or online: your income, assets, work history and other basics relative to your personal financial position.

The outcome is simply based on the information that you have provided although some lenders will run a credit report, a very necessary part of the equation. A credit report will expose your debt. Outside of the credit report, none of the pre-qualification information is verified.

Pre-qualifications tend to be fairly inaccurate because most house hunters will round up income and assets. Still, they are better than nothing and absolutely imperative to have; most listing agents will not even consider an offer that is not accompanied by a pre-qualification letter. It is a disservice to a homeowner.

Pre-approval demands that you have completed a formal application. You will have submitted your pay stubs, W-2’s and asset statements. A mortgage specialist has verified this information. The lender will have subsequently received either an automated underwriting decision stating an approval or he will have submitted your loan to an underwriter resulting in a conditional pre-approval.

This approval is contingent upon nothing changing from the time you were pre-approved until you close the transaction, i.e., your credit report numbers cannot go below a certain benchmark or you cannot change jobs. This information will all be re-verified just prior to closing.

Several factors make a pre-approval “conditional” in addition to your personal financial and employment situation remaining stable. For example, it is dependent on the home you are buying appraising for sales price or more. The seller must have “clear title” to the home, the right to sell the property; this is verified by the title company.

Both pre-qualifications and pre-approvals are often done at no cost to the borrower. I can provide you with names of excellent lenders; just call me at 713-818-2404.