Texas Real Estate: April 2016

Monday, April 25, 2016

Temporary Buy Down

There is an infrequently-used mortgage program available that could be the solution to a buyer's or seller's problem.

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A temporary buydown is fixed rate mortgage that the seller has prepaid interest at closing to lower the payments for a number of years. The borrower must qualify at the note rate but gets the benefit of lower payments for the early years.

A 2/1 is a common buydown that the first year's payment is calculated at 2% lower than the note rate and the second year's payment is calculated at 1% lower than the note rate. The third through thirtieth years' payments are the note rate.

Let's set the scene. A buyer is using their available cash for down payment and closing costs to get into the home. They'd like to put their own touches on the home when they move in but may not be able to for a year or two since most of their cash was used.

In this example, a $250,000 home is purchased with a 3.5% down payment and a 4% mortgage for 30-years. Normally, the principal and interest payment would be $1,151.76 for the full 30-year term. If the seller will pay the lender $4,736 at closing, it can be applied to pre-pay part of the interest for the first two years.

The first year, the buyer's P&I payment will be $891.71 for 12 months based on a 2% interest rate or 2% lower than the 4% note rate. It is $260.06 lower per month in the first year. The second year, the buyer's P&I payment will be $1,017.12 for the next 12 months based on a 3% interest rate or 1% lower than the 4% note rate. It is $134.64 lower per month in the second year.

A bonus for the buyer will be that the cost of the buydown paid at closing by the seller becomes prepaid interest that is deductible by the buyer in the year of purchase. The buyer gets lower than normal payments for the first two years and a sizable tax deduction.

This type of program can be very beneficial to a seller who wants to offer terms to improve the marketability of their home rather than lower the price. The challenge will be explaining it to not only potential buyers but even agents who are not familiar with this program.

Wendy Huang, MBA,SRS, GRI, CRS, IRES, e-pro, ASP, ALHS, SFR, RFC, RE/MAX Premier Group, RE/MAX Hall of Fame,

RE/MAX Lifetime Achievement ; Over 20 years' experience!

Helping Over 1000 Families Meet Their Real Estate Needs !!!

Direct: 972-365-7888

Has your home value gone up in the past 6 months? Click here for a Free INSTANT Report ! '
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Wednesday, April 20, 2016

2802 Crystal Falls Dr ! A must see!

2802 Crystal Falls Dr, Garland, TX 75044

4 beds baths3,121 sqft

$360,000

Monday, April 18, 2016

Tips of Buying Rentals

Buying rental property can be an excellent decision and the better informed you are, the more likely you'll have favorable results. The following suggestions can help you with your decisions.

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Real estate is a long term investment affected by supply, demand and the economy. It isn't an investment that is easily converted to cash. The costs to acquire and dispose of real estate are sizable and need to be spread over years to minimize their effects on the rate of return.

Invest in average price homes or slightly below average price to appeal to the broadest market not only when you are renting but later on when you sell it. The average price is relative to the market you are in and those specific prices.

Lower-priced homes will rent for more relative to higher-priced homes. There is an inverse relationship between rent as a percentage of the price. As the price increases, the rent as a percentage of the price decreases. For example, a $200,000 home might rent for $1,750 a month or 0.88% where a $400,000 home might only rent for $2,250 a month or 0.68%.

Choose predominantly owner-occupied neighborhoods because when you sell the home, it will appeal to a homeowner who will most likely pay a higher price for the home. Homes in predominantly tenant-occupied neighborhoods tend to sell to investors who pay lower prices and will not be emotionally involved with the purchase.

Purchase a property with the idea of selling it in mind. You may be able to get a property for a bargain price today but if it is due to a functional obsolescence like a bad floorplan or not enough bathrooms, that problem will still be there when you're ready to sell the property. Identify what the problem is and what solutions are available. The property may rent fine in that condition but before you sell, it will need to be corrected.

Get the home inspected before you purchase it. Having the property checked out can save thousands in unanticipated expenses.

Consider getting a home warranty on your rental. The annual premium can limit the out of pocket expenses for repairs and maintenance.

Risk can be minimized by understanding the investment and what is involved in the acquisition, operation and disposition. For the typical homeowner, rental property is something that they can relate to because of the similar attributes of the home they live in.

Wendy Huang, MBA,SRS, GRI, CRS, IRES, e-pro, ASP, ALHS, SFR, RFC, RE/MAX Premier Group, RE/MAX Hall of Fame,

RE/MAX Lifetime Achievement ; Over 20 years' experience!

Helping Over 1000 Families Meet Their Real Estate Needs !!!

Direct: 972-365-7888

Wednesday, April 13, 2016

How Earnest Are You?

"If I tell you it's going to rain, you can put the buckets on the porch." If you grew up in the south, you made have heard this expression when a person is testifying to the veracity of his word. If you know a person and/or their reputation, you know whether you can trust their word or not.

However, with a stranger such as a buyer, the seller doesn't know whether they'll live up to the terms of the contract or not. Buyers submit earnest money along with a contract to demonstrate their commitment to the terms of the offer.

The more earnest money that the buyer deposits indicates to the seller a higher level of commitment to the contract. Except for stated contingencies in the sales contract, if the buyer fails to close on the sale, the earnest money may be forfeited. Significant earnest money makes the seller feels more secure that the contract will close.

There certainly are a lot of things that can dictate how much earnest money is appropriate. Local customs, price of the home and type of mortgage can all help to determine the proper amount. In some areas, it may be common for it to be 1-5 percent of the purchase price. In other areas, it might be a specific amount like $1,000 to $10,000 depending on the sales price. It really comes down to whatever the buyer and seller agree is the proper amount.

Another strategy is to put up an adequate amount initially until you get through the inspections or contingency period and then, to put up an additional amount when the contingencies have been removed.

The earnest money demonstrates the buyers' sincerity in making the offer and proceeding according to the agreement so the seller can take their home off the market and start making plans to move and give possession of their home. Ultimately, both parties want to close as anticipated according to the contract and the earnest money helps facilitate that.

Wendy Huang, MBA,SRS, GRI, CRS, IRES, e-pro, ASP, ALHS, SFR, RFC, RE/MAX Premier Group, RE/MAX Hall of Fame,

RE/MAX Lifetime Achievement ; Over 20 years' experience!

Helping Over 1000 Families Meet Their Real Estate Needs !!!

Direct: 972-365-7888

Monday, April 4, 2016

Components of a Credit Score

Credit scores are used by lenders to measure the credit worthiness of borrowers. While there are several different companies that offer scores, the FICO, Fair Isaacson Corporation, is the model that is used most often.

There are five key components that determine the overall score or rating. The most emphasis, 35% of the overall score, is placed on payment history which reflects whether the borrower paid on time and as agreed by the terms of the credit. Being late, missing payments or going into default would have adverse effects on this part of the score.

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The second largest component, 30%, is credit utilization or the amount owed in relation to amount available. A person might have a $4,000 outstanding balance on available credit of $20,000. This would be a 20% ratio and would be considered acceptable.

Owing $15,000 on $20,000 of available credit would be a 75% ratio and would negatively affect this part of the credit score. FICO says people with the best scores average around 7% credit utilization.

The length of time each account has been open and the account’s activity determines 15% of the total credit score. By having a longer credit history, the credit provider has a better indication of the borrower’s long-term financial behavior. Having an open account without activity doesn’t offer a provider much information.

New credit and types of credit each account for 10% of the total score. New credit can adversely affect a score because it is a new obligation without history of how it will affect the borrower’s ability to repay all of their liabilities. Types of credit include both revolving and installment debt. A good mixture of each can indicate less risk for lenders.

The combination of all five areas make up the total score which lenders use to determine credit worthiness. Another confusing issue is that all credit scores are not mortgage credit scores. This particular score determines not only whether the lender will make a mortgage but at what interest rate.

The best place to get your credit score if you’re planning on purchasing a home is from a trusted mortgage professional. This person will be able to suggest things to improve your score if necessary. Buying a home is one of the largest investments in most people’s lives; it is really not a do-it-yourself activity.

Wendy Huang, MBA,SRS, GRI, CRS, IRES, e-pro, ASP, ALHS, SFR, RFC, RE/MAX Premier Group, RE/MAX Hall of Fame,

RE/MAX Lifetime Achievement ; Over 20 years' experience!

Helping Over 1000 Families Meet Their Real Estate Needs !!!

Direct: 972-365-7888

Monday, April 25, 2016

Temporary Buy Down

Wednesday, April 20, 2016

2802 Crystal Falls Dr ! A must see!

2802 Crystal Falls Dr, Garland, TX 75044

4 beds 3.5 baths 3,121 sqft

Monday, April 18, 2016

Tips of Buying Rentals

Wednesday, April 13, 2016

How Earnest Are You?

Monday, April 4, 2016

Components of a Credit Score

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4 beds baths3,121 sqft