One of my specialties is representing the best interests of Magnolia area buyers throughout the home buying process. My comprehensive, high-quality services can save you time and money, as well as make the experience more enjoyable and less stressful.

If you’re like most people, buying a home is the biggest investment you will ever make. So whether you’re buying a starter home, your dream home or an investment property, why not take advantage of my experience as a local market expert for Magnolia to make the most informed decisions you can, every step of the way?

The following articles provide useful information and are a great place to start if you’re considering buying a home.

Home buying is becoming more and more complex. Contracts are getting longer and escrows, it seems, are getting shorter and shorter. Planning and preparation, including loan pre-qualification and comparative sale information are crucial to the process.

I will:

• Listen to your wants and needs and recommend a lender for prequalification
• Work with you and the lender to establish your comfortable sales price
• Tour and search the area of your choice for homes which meet your requirements
• Complete an estimated settlement statement showing your expenses
• Negotiate the transaction to your specifications
• Work closely with you throughout the escrow process

I feel it is important to listen to a buyer’s wants and wishes first. Whether it’s over the phone or in a convenient meeting place, I give buyers the opportunity to tell me what is most important to them so I can guide them in the right direction.

I have experienced financial representatives who can meet with buyers to provide home loan information and a pre-qualifying letter, if they choose. I exhaust every traditional channel, and then explore other resources to find the right home for a qualified buyer. I concentrate on educating the buyer and making the selection process an enjoyable experience. However, the true test of a good Realtor comes after the home has been found.

I consistently pursue excellence in the area of negotiating skills, contracts, disclosures, and construction of a successful transaction. I stay with the buyer throughout the details of the escrow process, keeping concerns to a minimum. I want the buyer to experience the pleasure, satisfaction and excitement of buying a new home. I welcome your confidential inquiry and promise a quick response.

1. Prepare Your Home for Sale

Well before you’re ready to plant that “For Sale” sign in your front yard, there is work to be done to prepare your home for sale.

Remember how keen your eye was to every small detail and defect in the houses you saw as a buyer? Now that door to your bedroom that never quite closed properly or that leaky faucet that you never got around to fixing will be seen by a potential buyer with that same keen eye.

Start making the obvious repairs today – even if you don’t plan to sell until a year from now. These repairs can cost money and take time. Plus fixing it now will allow you to enjoy the results before it’s time to move out.

If you plan on doing some improvements before the sale, the best place to start is where the buyers start: at your curb. Potential buyers base a large part of their decision on a property’s “curb appeal,” so make yours say something positive. That means a tidy front yard, a house with well-painted trim, a tidy driveway and a clear, welcoming entryway.

Inside, the biggest return on your investment continues to be improvements to the kitchen, followed closely by improvements to the master bedroom. If you’re making these improvements shortly before selling the house, consider painting and decorating the rooms in neutral colors, the most appealing choice to the greatest number of potential buyers.

Inside and outside, start reducing the clutter. When it comes time to show your home, less will mean more. Potential buyers don’t want to see how your closets overflow with clothes, how every room feels cramped with furniture, or how the yard is difficult to maneuver with that rusty swing set in the way. So downsize now; it not only will make the preparation for showing your home easier, it also will make packing for your move faster.

2. Find a Real Estate Professional

If you’ve been through the home-buying process, you already know how complicated the real estate business can be. While you can opt to sell your home yourself, it can be time-consuming and often not worth the money saved on commissions.

However, if you do hire a real estate professional as your selling agent, do your homework. Ask friends and family for recommendations, interview several candidates, attend a few open houses and watch the professional in action. Do you think this person would present your house well to potential clients?

When interviewing a candidate, ask him or her to prepare a “comparative marketing analysis” for your house. This might include a demographic of the neighborhood, the quality of schools in the area and a suggested list price for the property.

Once you’ve chosen a real estate professional to help sell your home, you’ll have to sign a contract stating that you’ll work solely with this professional for a designated number of months, often between one and six months. This means no other real estate professional will be allowed to sell your home on your behalf during this time.

So put some thought into the professional you choose. The right agent will help you sell your home in a timely manner and at a price that benefits you.

3. Get Your Paperwork Together

When you meet with your new listing agent, he or she will need a lot of documents from you to prepare your home for sale. Among the things he or she will want to see are:

• Pay-off Notice: A letter to the lender stating intention to payoff the mortgage.

• Assessments or Easements: If there’s a tax assessment or easement on the property, documents stating such will have to be included in the purchase contract.

• Property Taxes: Proof of property taxes paid.

• Utilities: Provide a record of the past 12 months’ utility bills.

You’ll want to make it clear now which items in the home you want to take with you – the heirloom chandelier in the dining room, the washer and dryer set you just bought last month – and which can stay behind as part of the home sale. Your real estate professional can help show you which items you should put away or replace before your house goes on the market.

4. Price Your Home

There are a number of factors that will affect the success of your home sale. They include: location of the home, interest rates, economic conditions, time of year, condition of the home, marketing the home, terms of the sale and accessibility to the home.

Some of these are not within your or your selling agent’s control – location of the home, interest rates, economic conditions. The other factors are items you should discuss with your real estate professional to determine what would benefit the sale of this property most.

For example, marketing your property in more innovative ways, such as on an Internet site like this one, may broaden the pool of potential buyers. If you can, waiting for a good time to sell your home – spring or fall, the most popularly home buying times – also may help it sell faster. And pricing the home properly can make a huge difference in whether a house is snapped up within the first several weeks of listing or sits on the market for more than a year.

To price a home properly, you and your real estate professional will have to study the local market, research comparable properties and consider current market conditions. This is where the “comparative marketing analysis” you requested when interviewing for a listing agent will come in handy as a place to start.

Now check around your neighborhood, your newspaper and Internet sites like this one for:

• Your competition: Are there many properties just like yours for sale in your area right now?

• Listing prices: What are other properties like yours listing for?

• Selling prices: What are other properties like yours selling for?

Based on these findings, your real estate professional should have the experience to help price your property at the right price for a sale that benefits you.

5. Market Your Home

Products that sell well usually have a good marketing strategy. The same can be said for your home. Work with your real estate professional to decide where you want to advertise. Will the house be advertised only with a yard sign? Do you want your house listed for sale not only in newspapers but also on Internet sites like this one? When can you make your house available for an “open house” showing?

When a potential buyer arrives for an “open house” or drives by and sees the for sale sign, you’ll want to provide a home profile handout that they can take with them. Decide what information should be included in the description of your home that will make it a must-see – and hopefully, a must-buy. Include one or more photos of the home to showcase the most appealing features of your property and help remind potential buyers of what they saw as they visit home after home.

You may even want to include a few lines about benefits of moving to this property, such as good schools, convenience to mass transit and other desirable community features.

6. Prepare Your Home for Showing

You’ll be thrilled that you did the hard work of Step 1 (Prepare Your Home for Sale) now that there’s little time left to get your house ready for visitors.

Now is the time to put on the finishing touches, just like that quick housecleaning you do before company comes over for dinner.

Outside: Keep your lawn trimmed, the rose bushes pruned, the weeds tamed. Put away the garden hose and the tools. Make sure the bulbs in your home’s exterior lighting fixtures are all in working order. Be vigilant about removing flyers, handouts and newspapers left on your front doorstep or driveway.

Inside: Brighten the rooms by opening the drapes, turning on the lights, cleaning the windows. Clear the clutter on the kitchen counter, bathroom sink, coffee table and couches. Make all the beds. Clean all your bathroom and kitchen fixtures. Do a quick vacuuming of the entire house, being sure to catch any cobwebs in the corners along the ceiling. Finally, take out the garbage.

If you have pets, find a safe place to keep them during a house showing: in the garage, in the basement or at a friend’s house.

Now leave the work to your real estate professional. Try to be away from home during a showing, but if you happen to be home when the potential buyers arrive, greet them at the door then politely excuse yourself. Make yourself scarce or go take a walk. It’s easier for a buyer to picture himself or herself living in the house when you’re not there. This is your home’s time to shine.

7. Respond to an Offer

Depending on market conditions, you may receive one or more offers for your property from interested buyers. Each offer will include the sale price, proposed closing date, proposed move-in date, financing, and contingencies that may include an appraisal or sale of the buyers’ current home. Let your real estate professional help you sort through the variables to determine whether you should accept, counter-offer or reject the offer.

If there are multiple offers, each offer will be presented to you in the order registered. You don’t need to decide anything until after you’ve seen all the offers. If you do accept or counter more than one offer, you are required to establish an order of precedence noting which is the primary offer, followed by the backups in order. This will help you avoid selling the house to more than one buyer.

8. Complete the Settlement

Once you have accepted an offer to buy your house, expect to make your house available to a housing inspector, a termite inspector and an appraiser. After seeing the results of the inspections, the buyer may request additional work is completed before purchase, such as repairing a damaged roof or fixing a leaky faucet. You should consult with your real estate professional to determine whether to comply with the buyer’s request or risk losing this offer.

During this flurry of activity, try to keep your home in show condition. The deal has not closed and still may fall through, which may mean showing your home to more potential buyers.

In the meantime, the buyer is working with a lender to secure a loan for the purchase. When the buyer has written loan approval, a closing date can be set.

There will be a final walk-through before all signatures are collected and the deal considered done. The buyer will go room by room to check that everything is in working condition and, if you had agreed to do so, any additional work requested after inspection is completed.

Now you can prepare for your own move, notify your utility companies of the date to transfer your account to a new address and start packing. Congratulations, you’ve sold your home!

I will work with you to make selling your home easier, quicker and more rewarding. Since countless variables are brought to the highly personal and emotional situation of selling a home, I have been trained to play a decisive role in representing you, the client. My function is that of an advocate and the ability to bring a comprehensive understanding of complex contractual relationships to the table.

In order to get the highest price possible for your home and yet have it sold in a timely fashion, an extensive marketing campaign is an absolute must. I engage in the most comprehensive plan possible. If you are interested in receiving additional information about the sale of your home, please fill out the response form.

I will follow a step-by-step marketing program that will provide you with service that is professional and courteous.

In the end, you will be sure that the price you set reflects the true value of your home under current market conditions . . . rest assured that you will be completely satisfied with your selling price once I have completed the proper research and evaluation of your home.

Let’s take a moment to look at the benefits of home-ownership, as opposed to renting:

Pride of ownership. If you’ve been thinking about buying a house for a while, you’ve also probably envisioned the feeling you’ll have when you first turn the keys in the door, and walk into a home that is truly yours. That feeling you envision is the pride of ownership, and the truth is that it never really goes away. Every time you pull into your garage, or walk up to your front door, you’ll enjoy the priceless thrill of knowing that you aren’t just living in a house, you’re living in your home.

Stability. With homeownership, there’s no worrying about having a landlord raise your rent, or asking you to move. If you obtain a fixed-rate mortgage, the payment you make in the last month of your mortgage will be the same as (or less than!) the one you made in the first month; there are no jumps in the cost of being in your home to take you by surprise.

Build equity. When you pay rent, you’re essentially paying someone else’s mortgage, and helping them to enjoy the benefits of ownership. Why throw your money away on someone else’s dream when you could be building equity in your own home? Despite recent waves in the real estate market, the average annual appreciation rate for homes was still 5.4% through 2009, according to the National Association of Realtors. Add to that the tax benefits of being able to deduct your mortgage interest from your federal taxes, and the wealth-building potential of homeownership becomes very apparent, indeed.

Total control. Owning your home means that it can truly become yours. Paint colors, lighting fixtures, and other decorative touches can now reflect the personality of your household, and not the tastes of someone else. Having control also allows you to reap the benefits of changes and improvements you make to your house. Improvements you make in a rental property end up benefiting one person: the landlord. Some landlords may even charge you for the costs of reversing any improvements you may have made! Having complete control over your home means that improvements you make will add to the value of your home, and ultimately increase the value of your investment.

One of the first, and most important, steps of buying a home involves familiarizing yourself with your credit report and your FICO® score. By making sure that you complete this step as soon as you embark on the journey from homebuyer to homeowner, you’ll make the entire process easier—and maybe even a little more affordable.

Downpayment & First-Time Homebuyer Assistance Programs

Harris County Down Payment Assistance Program

$14,200 first time home buyer grant for home buyers purchasing a home in Harris County outside of the city limits.

• $9,500 down payment assistance for resale properties
• $14,200 down payment assistance for new construction
• $120,000 maximum sales price of home
• Must be a first time homebuyer
• Must have one credit score of 620
• Debt to income bottom ratio cannot exceed 42%
• Must invest at least $350 toward the purchase of the home
• Buyer cannot have more than $10,000 in liquid assets
• Family size income limits:  1 / $35,750; 2 / $40,850; 3 / $45,850; 4 / $51,050; 5 / $55,150; 6 / $59,200; 7 / $$63,300; 8 / $67,400

City of Houston Down Payment Assistance Program

$19,500 first time home buyer grant for home buyers purchasing a home in the City of Houston whose income is at or below 80% area median income.

• $19,500 down payment assistance
• $200,160 maximum property sales price
• Do not have to be a first time buyer ( but cannot currently own a home )
• No asset limit
• Must invest $500 into the home buying transaction
• The applicant must have $1,000 in liquid assets.
• Must complete an 8 hour homebuyer education course.
• Must live in the home for at least 10 years for assistance to be forgiven.
• Family size income limits: 1 / $35,750; 2 / $40,850; 3 / $45,950; 4 / $51,050; 5 / $55,150; 6 / $59,200; 7 / $63,300; 8 / $67,400

Houston HOPE Program.

First time home buyer grant for home buyers purchasing a home in one of many Houston Historic communities.

• Must purchase a home in one of the Houston Hope Neighborhoods ( see map at www.houstontx.gov/lara )
• $37,500 down payment assistance
• $39,900 down payment assistance for teachers, police officers, fireman and EMS personal.
• $200,160 maximum property sales price
• Must invest at least $500 into the home buying transaction
• Applicant must have $1,000 but not nore than $35,000 in liquid assets
• Must live in the home for at least 10 years for assistance to be forgiven.
• Family size income limits:  1 / $35,750; 2 / $40,850; 3 / $45,950; 4 / $51,050; 5 / $55,150; 6 / $59,200; 7 / $63,300; 8 / $67,400

Workforce Housing Program. $30,000 first time home buyer grant for home buyers purchasing a home in the City of Houston whose income is at 80% – 110% of area median income.

Montgomery County. $14,500 first time home buyer grant for home buyers purchasing a new home in Montgomery County outside the city limits of Conroe.

City of Pasadena “SETH”.

$5,000 first time home buyer grant for home buyers purchasing a home in the City of Pasadena.

• Ft. Bend County
• $200,160 maximum property sales price
• $10,000 down payment assistance
• Must be first time homebuyer
• Must complete homebuyer education class
• 33% maximum top debt ratio based on SETH’s income calculation
• Buyer must contribute $500 of their own funds.
• Family size income limits:
• 1 / $35,750; 2 / $40,850; 3 / $45,950; 4 / $51,050; 5 / $55,150
• Montgomery County ( out of funds as of 17 September 2009 ) anticipate 3 months till re funded.
• Pasadena ( out of funds as of 17 September 2009 ) anticipate 3 months till re funded.

SETH Single Family Bond. Southeast Texas first time home buyers can qualify for 3% down payment assistance with a fixed 5.25% mortgage rate towards the purchase of their first home. Areas include: Austin, Brazoria, Chambers, Liberty, Matagorda, Waller, Walker & Wharton and the cities of: Baytown, Deer Park, Dickinson, La Marque, La Porte, League City, Pasadena, Santa Fe, Shoreacres, Texas City and Tomball.

Texas Veteran’s Mortgage Credit Program. Military Veterans with an Honorable Discharge can now qualify up to $2,000 IRS Tax Credit every year for the life of their home mortgage. NO first time home buyer requirement!

Texas First Time Homebuyer Program Structure – State Bond 77.

Texas first time home buyers are now receiving 4% Down payment Assistance with a fixed 5.10% mortgage rate towards the purchase of their first home.

USDA Single Family Housing Guaranteed Loan Program. No Money down home loan for first time home buyers purchasing a home in a Rural Area. Rural areas are normally considers small towns and cities with a population less than 250,000 residents, ie.. Crosby, El Campo, Fresno, Fulshear, Kendleton, Needville, Wharton, Waller, Wallis… Please contact me and I will let you know if your area qualifies.

• No maximum purchase price
• No downpayment required
• 100% financing with a 30 year fixed rate
• No PMI
• Available assets don’t have to be used

Texas Veterans Land Board. Texas Veterans can qualify for up to 1% reduction in mortgage interest rate through the Texas Veteran’s Land Board. Reduced rate for service members with 30% or greater compensation service connected disability.

Texas Mortgage Credit certificate (MCC) Program. A MCC is a federal income tax credit.  It is based on the mortgage interest paid each year.  The amount of tax credit is calculated at 30% of the annual mortgage interest paid – not to exc eed $2,000 per year.  This credit reduces the federal income taxes of the buyer and has the potential of saving the MCC holder thousands of dollars over the life of the loan.  Mortgage interest credit (MCC)  is a non-refundable tax credit, therefore, the homebuyer must have tax liability in order to take advantage of the tax credit.

Texas State Affordable Housing – The Texas State Affordable Housing Corporation serves the housing needs of low, very low and extremely low-income Texans and other underserved populations who do not have comparable housing options through conventional financial channels.

Not all real estate licensees are the same; only those who are members of the NATIONAL ASSOCIATION OF REALTORS^® are properly called REALTORS^®. They proudly display the REALTOR ” ^®” trademark on their business cards and other marketing and sales literature.

REALTORS^® are committed to treat all parties to a transaction honestly. REALTORS^® subscribe to a strict Code of Ethics and are expected to maintain a higher level of knowledge of the process of buying and selling real estate. An independent survey reported that 84% of home buyers would use the same REALTOR^® again.

Real estate transactions involve one of the biggest financial investments of most people’s lifetime. Transactions today usually exceed $250,000. If you had a $250,000 income tax problem, would you attempt to deal with it without the help of a certified professional accountant? If you had a $250,000 legal question, would you deal with it without the help of an attorney? Considering the small upside cost and the large downside risk, it would be wise to work with a professional REALTOR^® when you are buying a home.

If you’re still not convinced of the value of a REALTOR^®, here are more reasons to use one:

Your REALTOR^® can help you determine your buying power – that is, your financial reserves plus your borrowing capacity. If you give a REALTOR^® some basic information about your available savings, income and current debt, he or she can refer you to lenders best qualified to help you. Most lenders – banks and mortgage companies – offer limited choices.

Your REALTOR^® has many resources to assist you in your home search. Sometimes the property you are seeking is available but not actively advertised in the market, and it will take some investigation by your agent to find all available properties.

Your REALTOR^® can assist you in the selection process by providing objective information about each property. Agents who are REALTORS^® have access to a variety of informational resources. REALTORS^® can provide local community information on utilities, zoning, schools, etc. There are two things you’ll want to know: First, will the property provide the environment I want for a home or investment? Second, will the property have resale value when I am ready to sell?

Your REALTOR^® can help you with negotiations and inspections. There are many negotiating factors, including but not limited to price, financing, terms, date of possession and often the inclusion or exclusion of repairs and furnishings or appliances. The purchase agreement should allow time for you to complete appropriate inspections and investigations of the property before you are bound to complete the purchase. Your agent can advise you as to which investigations and inspections are recommended or required.

Your REALTOR^® provides due diligence during the property evaluation. Depending on the area and property, this could include inspections for termites, dry rot, asbestos, faulty structure, roof condition, septic tank and well tests, just to name a few. Your REALTOR^® can assist you in finding qualified responsible professionals to do most of these investigations and provide you with written reports.

1. You will also want to see a preliminary report on the property title. Title indicates ownership of property and can be mired in confusing status of past owners or rights of access. The title to most properties will have some limitations; for example, easements (access rights) for utilities. Your REALTOR^®, title search company or attorney can help you resolve issues that might cause problems at a later date.
2. Your REALTOR^® can help you understand different financing options and identify qualified lenders.
3. Your REALTOR^® can guide you through the closing process and make sure everything flows together smoothly.

Why not save some money?

There are plenty of FSBO Web sites that, for a nominal fee, give your home online exposure. Add in the cost of a $20 sign for the front yard and a bit more for a classified listing in your local newspaper, and you’ve potentially saved a whole heap of money.

Before you take that plunge as a novice realtor, ask yourself these questions. You may find you are not prepared to go it alone!

1. What is the condition of the current title?
2. Are any deeds required from prior owners? (This is common when the previous owner financed the current seller.)
3. Are there unpaid liens or special assessments due for collection upon sale? (Municipal improvements like new sewer, paid over years, is typically due in full upon closing.)
4. Have you checked the assessment and assessor’s records?
5. Did you complete proper disclosure forms per state law?
6. Are there factors that would make the property difficult to finance with typical lenders? (Examples are older homes, substantial acreage, private water and sewer, numerous out buildings…)
7. Have you obtained an updated Certificate of Occupancy?
8. Did you review existing financing to determine whether it can be assumed?
9. If yes to #8, have you contacted the lender to determine what to do to complete the transaction?
10. Do you know your equity in the property?
11. Is the property governed by a Home Owner’s Association? If yes, are there limitations on the property’s use that should be conveyed to potential buyers?
12. What factors will you use to set an asking price?
13. Did you leave room for negotiation in your asking price?
14. Do you have access to area comps (comparable properties)?
15. How familiar are you with the local property sales market?
16. Can you be unbiased about your home’s faults?
17. Will you attempt to add into the home’s market value either what you’ve “put into it” or “need out of it?”
18. Do you know which legal documents to prepare for a home sale?
19. Where can you obtain said documents?
20. Will you need assistance filling those documents out?
21. Do you know an appraiser?
22. Did you budget to pay for an appraiser?
23. Did you realize that you must pay a title search company to prepare documents and other forms?
24. Do you have a real estate lawyer to review all documentation?
25. How are you at negotiating? Are you prepared to balance offers and counter offers?
26. What contingencies might arise? Can you deal with them like a third party could?
27. How comfortable are you with allowing strangers to tramp through your house and peer into your closets?
28. Without an agent, how will you screen for serious buyers?
29. Do you understand the difference between prequalified and preapproved?
30. What ID will you ask from strangers who want to see your home?
31. Is your time flexible for showings?
32. Do you know where to advertise for the best response?
33. Do you know what a Conditional Loan Approval letter is?
34. What are your state’s disclosure laws for termite problems?
35. What are your state’s disclosure laws for leaky roofs? (This knowledge can help prevent being sued later on.)
36. What are your state’s laws about revealing ghost tales or crimes linked to the property?
37. Can you help a prospective buyer obtain a mortgage?
38. Can you help that buyer understand the differences between fixed, adjustable, or balloon mortgages?
39. How will you prequalify a potential buyer?
40. What happens if you receive an offer from someone that cannot afford your home?
41. Do you know an appraiser to recommend?
42. Do you have a termite inspector?
43. What title insurance did you buy?
44. Are there building permits for improvements?
45. Do you have a copy of the Lead Paint Disclosure form?
46. Do any environmental disclosures apply such as hazardous waste or Superfund sites?
47. Do you have a CLUE report available? Do you have a clue what a CLUE report even is?
48. What closing costs will you have to pay?
49. Do you have a property condition disclosure statement?
50. Do you have a legal purchase document?
51. Do you have a legal description of the property?
52. Is there a contingency clause addendum?
53. Does your state carry risks when a seller agrees to “carry back” a note from the buyer? Did you know those risks can cost you thousands of dollars?
54. Did you realize your good credit rating can be ruined by your buyer’s default? (This can span months, even years, after that buyer “assumes” your loan.)
55. Have you heard that a clever buyer could stay in possession of your property for months after defaulting on the contract, and in effect, live for free at your expense?
56. Were you aware that most buyer complaints involve alleged damages of less than $10,000, but it can cost you thousands in attorney’s fees to defend the claim?
57. If you’ve read this far, you might be wondering why get into this mess? Are you up for all the paperwork, the legal liability, the showings, multiple fees, and quite frankly, the headaches?

Currently, home owners who take out FHA-backed loans are required to have a minimum down payment of 3.5 percent; the GOP bill seeks to raise that to 5 percent. The GOP says it wants to protect home owners against default and improve FHA’s finances.

The bill has not yet been introduced but remains in draft form. However, the draft legislation is expected to be discussed on Wednesday by the subcommittee.

The draft legislation also calls for lowering FHA loan limits in several areas.

As of now, the maximum size of FHA-backed loans in expensive areas of the country is set to drop to $625,500 from $729,750 as of Oct. 1. In less expensive areas, the limit may drop to $271,050. The GOP draft bill wants to drop the limits even more to 125 percent of a county’s median home price, Dow Jones reports.

“While we support reforms to strengthen the program, changes should not be made at consumers’ expense by drastically impacting the affordability and availability of mortgage capital,” Ron Phipps, the National Association of REALTORS®’ president, said in a statement.

Source: “House Republicans Aim to Raise Money Down for FHA Loans,” Dow Jones International News (May 23, 2011)

NAR President Ron Phipps spoke before the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity regarding a discussion draft of legislation to reform FHA.

“As the leading advocate for home ownership, NAR strongly supports FHA’s single- and multifamily mortgage insurance programs. Since 1934 millions of qualified home buyers have relied on FHA-insured loans to purchase a home, and particularly in recent years when private financing dried up,” said Phipps, broker-president of Phipps Realty in Warwick, R.I. “NAR supports efforts to strengthen FHA and reduce its current market share; however, changes should not be made at consumers’ expense by drastically impacting the availability and cost of mortgage capital for millions of Americans, especially while the housing market recovery remains fragile.”

NAR supports sections of the discussion draft that would help FHA remain fiscally strong and better monitor risk, increase enforcement tools and protect taxpayers but opposes any increases to the down payment requirements.

Phipps testified that FHA remains a leader in insuring safe, low-down payment mortgages to responsible, qualified borrowers, with as little as a 3.5 percent down for borrowers with good credit.

“Proposals to further increase FHA down payment requirements are unwarranted,” Phipps said. “The current 3.5 percent down payment and closing costs represent a significant financial commitment. Requiring a larger down payment does little to reduce risk of default compared to strong underwriting requirements, and only puts home ownership out of reach for many families who have the income necessary to carry the cost of the home purchase,” Phipps said.

NAR has long maintained that the principal barrier to home ownership is accumulating the money needed for down payment and closing costs, and estimates that it would take the average American family, living frugally and saving at the current national rate, nearly seven years to save for a 5 percent down payment on a $200,000 home and more than 10 years to save for 10 percent down.

Phipps also testified about the importance of making permanent the FHA mortgage loan limits currently in effect. He stated that decreasing the current loan limits would reduce the availability of mortgage loans across the country, not just in higher cost areas, and increase the cost of capital to consumers. NAR estimates that reverting to the lower statutory limits on October 1 will impact 612 counties in 40 states and the District of Columbia, with an average loan limit reduction of more than $50,000. Further reductions to the loan limits could have an even greater dramatic impact on liquidity and halt the housing market recovery.

“Allowing the current loan limits to decrease will have an immediate negative impact on mortgage availability. FHA has played a critical role in holding down mortgage rates. Without FHA, the higher mortgage rates paid by consumers would flow into noncompetitive banks that are too big to fail,” Phipps said.

Phipps praised FHA for continuing to serve the needs of millions of hardworking American families and for the steps the agency has taken to ensure its long-term financial soundness. “FHA is the only government agency that operates entirely from self-generated income, costing taxpayers nothing. In fact, FHA programs have helped bring net revenue to the U.S. Treasury, helping reduce the budget deficit,” he said.

Source: NAR

Meanwhile, the National Association of Home Builders reported this week that home affordability reached its highest level in 20 years, making the purchasing power for home buyers even better during this traditionally prime buying season.

Here’s a closer look at mortgage rates:

30-year, fixed-rate mortgage: Averaging 4.60 percent this week, it was down slightly from last week’s 4.61 percent average. Last year at this time, 30-year rates averaged 4.84 percent. The 30-year fixed rate mortgage hasn’t been under this week’s 4.60 percent average since early December 2010 when it fell to 4.46 percent.
15-year, fixed-rate mortgage: Averaging 3.78 percent this week, it also was down from last week’s 3.80 percent average. Last year at this time, the 15-year fixed-rate mortgage averaged 4.21 percent. It has not been under this week’s 3.78 percent average since late November 2010 when it fell to 3.77 percent.
5-year adjustable-rate mortgage: Averaging 3.41 percent this week, it was down from last week’s 3.48 percent average. A year ago at this time, the 5-year ARM averaged 3.97 percent.

Nearly 75 percent of all new and existing homes sold in the first quarter of 2011 were affordable to families earning the national median income of $64,400, according to the National Association of Home Builders/Wells Fargo Housing Opportunity Index. The previous high was set in the fourth quarter of 2010 with 73.9 percent.

“With interest rates remaining at historically low levels, today’s report indicates that home ownership is within reach of more households than it has been for more than two decades,” says Bob Nielsen, chairman of the National Association of Home Builders.

The most affordable metro housing market in the nation? Syracuse, N.Y., (surprise!)  in which 94.5 percent of all homes sold were affordable to households earning the area’s median family income of $64,300.

Other metro cities ranking high on the affordability index were Youngstown-Warren-Boardman, Ohio-Pa.; Indianapolis-Carmel, Ind.; Warren-Troy-Farmington Hills, Mich.; and Toledo, Ohio.

Meanwhile, the least affordable major housing market for the first quarter of 2011 was New York-White Plains-Wayne, N.Y.-N.J.