Preferred Properties of Texas

The Preferred way to buy & sell property for over 25 years

5 Reasons About Selling A Home That Aren’t As Scary As They Seem

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For the vast majority of homeowners, there’s a practically inevitable event somewhere on the horizon: Eventually, you will probably sell your property. Thousands of homes are sold every day. It’s only the nature of the real estate business; properties are constantly being sold and bought. Nevertheless, when it is time for everybody to be one of those properties, it can be somewhat scary. Any home sale could be susceptible to hang-ups that seem uncomfortable. The process of getting your house ready to market can be daunting. Handing over the keys to complete strangers can be discomforting. That said, there are a number of things that prospective home sellers appear to fear the most. But not everything needs to be so scary!

Creating (and keeping) your house presentable
One of the common complaints of home sellers is the requirement to wash, repair and stage their homes so that visitors can pop in each time and poke around. The reality is, however, that getting a house ready to reveal frequently means a de-cluttering process that would be necessary before proceeding anyway. It is a seller’s chance to have a jump onto the moving process, to purge unneeded possessions and get personal touches prepared to move to the next home. Should you think of this as a chance, instead of a chore, getting a home ready to show to potential buyers may have significant advantages. And if you are working with the right listing agent, you shouldn’t ever be made to drop everything and straighten up for an unexpected showing. A fantastic listing agent will adapt your daily life without forfeiting sales attempts.

Criticism from buyers

When push comes to push negotiations, buyers will point out what they view are deficiencies in your property. It is merely a part of the sales process, and hearing that the carpeting you love needs to be torn out or the wall color on your youngest one’s nursery needs to be altered aren’t personal indictments of you or your property. It’s hard to hear that other folks don’t enjoy what you love about your home. But if you’ve been searching for another home, you’ve likely made the same kind of observations. You want to be able to put your touches on your new space, and you do not mean any insult to the present owners by having that desire. It is nothing personal, so it is not anything to fear when the shoe on the other foot.

Home inspections

At the same time, it is nerve-wracking to have your home gone over with a fine-toothed comb with a home inspector, that can be by contract, working for the purchaser. Frankly, any dwelling inspector will point out some flaws in almost any home. That’s their job, and they have a fiduciary duty to the buyer to communicate their professional opinion. However, odds are, most of what is shown by the inspector is what you already understand. By way of example, when you’ve got 20-year shingles on the roof and you have not replaced it in 18 years, it’s just true that the roof is near replacement era. If your furnace isn’t operating efficiently, it is probably something you have noticed, and you may make sure that a professional inspector will corroborate that. Remember that nothing that comes up in a house inspection is always a deal-breaker. Everything is negotiable, and when you were not selling the house, it’s likely you were going to absorb any cost to remedy anything shown by a home inspection anyhow.

Unqualified buyers

There’s no question that there are”tire-kickers” on the market, or people who simply prefer to look at homes on the market but have no real interest or capacity to actually purchase the house. It just goes with the land. But should you be certain to just consider offers from potential buyers who have been pre-qualified with a creditor, you are more inclined to avoid bogus purchase offers. No lender’s pre-qualification correspondence is ironclad, but it means that the purchaser is somewhat honest about their capacity to buy a home such as yours. And any critical buyer’s agent is going to insist on mortgage pre-qualification of their customers before presenting a deal.

Saying good bye

That is an oft-overlooked facet of the procedure, but it’s not always easy to leave a house in which you have lived for a long time. It may be uncomfortable and scary because each home purchase is quite an emotional one. However there are a couple things to keep in mind, perspective-wise. Certainly one, giving up a space you have considered home usually means that you’re going to embark on that exciting adventure . You have to experience that anew, get to put your own personal stamp on a fresh place of your own. It is a goodbye that accompanies an exciting brand new hello. Second, you are providing that same experience for someone else by entrusting to them the place you have grown to appreciate. You are giving somebody else the opportunity to appreciate that house exactly the way you did when it fit one of the best. You’re not walking away from all that’s meaningful; you’re only giving somebody else the same opportunity you’re given to make meaningful moments.

The bottom line is that selling a house can be sort of scary. There’s nothing wrong with admitting that. But looking at things from various viewpoints, and recognizing that just about every homeowner at one point or another goes through it, and hiring the right agent might make it somewhat less scary.

Preferred Property of Texas is here for you and to make the real estate process less scary and go smoothly. CALL TODAY!

Home Buyer Down Payment Assistance Programs

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Home Buyer Down Payment Assistance Programs

Don’t let the lack of a down payment stop you from becoming a homeowner.  With mortgage rates at historic lows, why not take advantage of this market! Here’s how a home buyer down payment assistance program may help you in achieving the American Dream.

So what is Down Payment Assistance?

DPA helps home buyers with grants and low interest loans that help reduce the amount of money needed to save for a down payment. It’s essentially the “money” to help a home buyer get into a home and can come from federal, state or local agencies, as well as non-profits and employers.

What types for DPA programs are available?

There are all types of programs available.  Some, like Grants, do not have to be repaid.  However, grants only make up a small percentage of what is available.  Other types of programs are considered loans and have deferred payments or are forgiven after a set amount of years.  It all depends on which program you choose.  You can also look  to use some loan programs with other down payment assistance programs as long as you qualify.

FHA Loan

An FHA loan is a loan insured by the Federal Housing Administration, and helps borrowers with lower credit scores or little down payment. This type of loan is usually chosen because it allows a borrower to put as little as 3.5% down and offers more lenient credit and debt-to-income requirements.  Because a small down payment is usually associated with these types of loans, you’ll need government-provided mortgage insurance (MI).  However, to compensate, lenders often offer FHA loans at attractive interest rates.

USDA Loan

The USDA loan is a loan program guaranteed by the U.S. Department of Agriculture with low interest mortgages designed for lower-income borrowers who wish to live in eligible rural areas. USDA loans offer low to no down payments.  There are income requirements for USDA loans and because they require low down payments, you’ll need to take out mortgage insurance (MI).

VA Loan

A VA loan program is a US Department of Veterans Affairs backed loan for active-duty military personnel, veterans and some spouses/widows. In addition to lower interest rates and minimal closing costs, the most distinct advantage of a VA loan is that it requires NO down payment and NO private mortgage insurance. Credit scores are important, however minimum requirements usually lead to a good interest rate.

Good Neighbor Next Door

The Good Neighbor Next Door is a HUD program that provides a 50% discount on a home’s list price in revitalization areas (designated by HUD) for law enforcement officers, firefighters, emergency medical technicians and pre-kindergarten through 12th-grade teachers.  There are eligibility requirements and the program is highly competitive. For public service professionals first-time home buyers, the program also offers benefits and grants. In return, home buyers must commit to live in the property for 36 months as the sole residence.

HomePath ReadyBuyer Program

For those first-time home buyers who don’t have a lot of money for closing costs and are wanting to purchase foreclosed Fannie Mae property, this program provides up to 3% in closing-cost assistance.  Before making the offer, buyers are required to complete an online first-time buyer education course.

FHA Section 203K

The FHA Section 203K loan is great for those wanting to purchase a home that needs major improvements but don’t have a lot of cash to do so.  This FHA-backed loan lets you roll the costs on the renovations into your primary mortgage. The down payment on these loans is as low as 3.5% but the cost of the improvements must be more than $5000.

Texas State Affordable Housing Corporation Programs (TSAHC)

TSAHC is a non-profit organization created to provide mortgage loans and down payment assistance grants for low-income families and other under-served populations who would not qualify through conventional financial channels. These programs offer 30-year fixed interest rate mortgages, down payment assistance as either a grant or 0% interest, no monthly payments due second lien, and is available statewide. TSAHC offers two first-time home buyer grant programs:

Homes for Texas Heroes Home Loan Program: Designed for teachers, fire fighters and EMS personnel, police and correctional officers, and veterans.

Homes Sweet Texas Home Loan Program: Designed for Texas home buyers with low and moderate incomes.

Contact us at Preferred Properties today if you’d like more information on how to purchase your first home!

Buying or Selling Rural Real Estate? Know the Lending Lingo

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In May 1917, W.S. and Mary Smith of Grayson County, Texas, became the first Farm Credit borrowers in the state when they refinanced a $10,000 farm loan at 5 percent interest with the newly formed Van Alstyne National Farm Loan Association – now a part of Lone Star Ag Credit.

Their new interest rate was a vast improvement over the 8 percent they had been paying on a bank note. Back then, lenders didn’t offer a choice of rates and terms. Until banking laws were changed and the Farm Credit System was established in 1916, long-term land loans were not available.

Rural real estate financing has changed dramatically since then. Today, as the Farm Credit System marks its 100th anniversary of supporting agriculture and rural communities, country home and land buyers have dozens of financing options. Whether you are purchasing or selling property, it helps to know the lending lingo. Following are a few terms used in rural financing today.

Appraisal – A written opinion of a property’s current market value prepared by a qualified appraiser.

Balloon Note – A long-term loan, often a mortgage, that has one large payment (the balloon payment) due upon maturity. A bal-loon note often has the advantage of low payments, thus requiring very little capital outlay during the life of the loan.

Basis Point – Basis points measure the movement of interest rates or yields in hundredths of a percent. One basis point is 0.01 per-cent, thus 100 basis points equal one percent.

Closing Costs – Costs for services required to close a mortgage loan, such as title insurance, inspections, appraisals, loan closing fees and attorney’s fees.

Closing Disclosure – A five-page form that provides final details about the mortgage loan that the applicant has selected. It explains loan terms, projected monthly payments and total closing costs. The lender must provide the closing disclosure to the applicant  at least three business days before the loan closing date.

Cooperative Lender – A lender that is owned and controlled by its customers. Each member has one vote. An example is a Farm Credit financing cooperative.

EIR (Effective Interest Rate) – Similar to the consumer APR, or annual percentage rate, the effective interest rate is an expres-sion of a customer’s total cost of borrowing in the first 12 months of a loan, including stock purchase, origination fees and interest, expressed as an interest rate.

Fixed-Rate Loan – A loan in which the interest rate is fixed for a pre-established time frame. The fixed-rate period can run for the full term of the loan, or for a period shorter than the full term.

Flood Determination – A process whereby a lending institution determines whether flood insurance is required and available for  a loan secured by a building or mobile home.

Inspection – An inspection of a prospective home or structure done by a professional to establish the structural and mechanical integrity of the building.

LIBOR (London Interbank Offered Rate) – The interest rate  that international banks charge each other for short-term inter-bank loans. It is usually quoted for one-, three- and six-month periods, and is a key reference rate used throughout the world financial markets. LIBOR is typically used as the base index for short-term loans and adjustable-rate mortgages. LIBOR rates are published daily in the Wall Street Journal.

Loan Estimate – A three-page form that the lender is required to provide to the loan applicant within three business days of receiving the mortgage application. It explains the important details about the loan requested, including estimated interest  rate, monthly payment and total closing costs.

Lot Loan – A lot loan is designed for people who wish to finance an unimproved property on which they intend to build a home in the future. Limited agricultural activity may occur on the property, but no intensive farming.

One-Time Close – Saves closing costs by combining your land loan, interim construction financing and permanent mortgage loan into one package.

Patronage – The portion of a cooperative’s annual earnings, after payment of all operating expenses, that are distributed to the cooperative’s members on a pro rata basis. Patronage dividends are a unique economic feature of cooperatives. They are paid in cash, allocated equities, stock or any combination of these, and effec-tively lower the cost of borrowing from a cooperative.

Preapproval – A general term that means a borrower has com-pleted a loan application and has provided his or her debt, income and savings information, which an underwriter has reviewed and approved prior to an actual transaction.

Prequalification – A preliminary step in the loan application pro-cess, a prequalification is a lender’s written opinion of the ability of the borrower to qualify for a particular loan amount. The amount prequalified by the lender is determined based on inquiries into the borrower’s credit history, debt, income and savings.

Prime Rate – A short-term, variable interest rate quoted by com-mercial banks as an indication of the rate being charged on loans to its best commercial customers. Even though banks frequently charge more and sometimes less than the quoted prime rate, it is  a benchmark against which other variable rates are measured.

Rate Lock – An option exercised by the borrower, at the time of the loan application or later, to “lock in” the rates and points prevailing in the market at that time. The lender and borrower are committed to those terms, regardless of what happens between that point and the established closing date.

Stock – Each Farm Credit co-op borrower becomes an owner of the cooperative through the purchase of stock equal to 2 percent  of his or her loan amount, not to exceed $1,000. In most cases, funds for the stock can be included in the loan. Ownership of this stock gives borrowers voting rights in the co-op. The stock invest-ment is repaid to the borrower when the loan is paid in full.

Variable-Rate Loan – Refers to any type of loan that does not have a fixed rate of interest over the life of the loan. Such a loan is adjusted periodically, usually according to changes in a standard index rate outside the control of the lender, such as the prime  rate, LIBOR or Treasury bonds or notes.

Preferred Properties of Texas have been helping buyers and sellers with their real estate transactions for over 25 years. Our Realtors have the expertise to assist you with your next property transaction. Don’t wait and let’s get started! Call today!

Home Buying Affordability in Today’s Market

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Everybody is ready to purchase a home at different times in their lives, and despite the health crisis, today is no exception. Recognizing how affordability functions and the main market factors that impact it could help those who are prepared to buy a house narrow down their optimal window of time to create a buy.

There are three Chief factors that go into determining how affordable homes are for buyers:

  1. Mortgage Rates
  2. Mortgage Payments as a Percentage of Income
  3. Home Prices

The National Association of Realtors (NAR), generates a Housing Affordability Indicator , which requires these three factors into account and decides an overall affordability score for home.

“…steps whether or not a normal household earns enough income to be eligible for a mortgage loan on a typical home in the regional and national levels based on the latest cost and income data.”

Even though there are 3 factors that drive the overall equation, the one that’s playing with the largest part in today’s homebuying affordability is low mortgage prices . According to this primary factor, we can see that it is cheaper to purchase a house now than at any time in the last seven years.

If you’re thinking about buying your first home or moving up to the one you’ve always hoped for, it is important to realize how affordability plays to the overall cost of your property. With that in mind, buying while mortgage rates are as low as they are now may save quite a bit of cash over the life span of your home loan.

If you feel ready to purchase a home,  purchasing this season may help save you significantly over time based on historical affordability trends. Reach out to a regional real estate professional now to determine if now is the ideal time to make your move.

Call today to speak with on of knowledgeable agents.

HOW TO FINANCIALLY PREPARE YOURSELF BEFORE LOOKING AT A HOME

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Prepare Financially Before Looking at Homes

Too often home buyers fail to prepare themselves financially before looking for a home to purchase. Doing so is a common mistake that many future home buyers make even though this may be the largest purchase of their lives. Not taking the proper steps to set yourself up for success could mean that you do not get your dream home, or it costs you more than it should.

Here are some of the best tips for preparing yourself financially before starting the home search process. By doing so you’ll be two steps ahead of the game and well on your way to home ownership!

CONNECT WITH A LENDER FAR IN ADVANCE

Before you start driving around neighborhoods, flipping through listings online or even stopping in to speak with a Realtor, it would be a good idea to know what your buying power is today. If you have a goal to be able to buy into a particular neighborhood, you should put a plan in place to be able to achieve that.

Speaking with a lender first to develop a plan of action on how you can qualify to buy a home in that area or price range is critical.

My recommendation is that you have an initial discussion with a lender nine months to one year in advance. Sound crazy? I know many people do not know that far in advance that they may be buying a home next year. For those who do, this is extremely important.

WHY IS IT IMPORTANT TO PLAN SO FAR IN ADVANCE?

First, your lender will let you know what you can qualify for today based upon your income, down payment and credit score.  There are other factors which play a part including credit events and large monthly payments on your credit report.

Income – Income sometimes is difficult to change in one year. Lenders will be looking at your last two years’ tax returns and recent pay stubs when you are ready to apply. They will also require that you have a two-year work history.

Some individuals decide to take a break for personal reasons without realizing that a gap in employment may prevent them from getting loan approval. Documenting your income is essential as well. If you are in a cash business, then you should begin depositing that money into an account on a regular basis so that you can qualify for a bank statement loan. These are just a few examples of what your lender will discuss with you.

Down Payment – This is extremely important, and it will partially determine your buying power. It is also connected to the various loan programs that you may or may not qualify for.  You will need to have those down payment funds in your bank account three months before you submit a loan application.

If you have little to no down payment and do not think you can raise additional funds over the next nine months, then your lender will discuss low down payment and loan program options which will then help determine your realistic price range.

If you can get to a twenty percent down payment that is ideal. When you don’t have at least twenty percent to put down, you’ll often be required to pay private mortgage insurance.

PMI is a useless fee that only benefits the lender as protection in the event you default on your loan. Most people will try to stop paying private mortgage insurance as soon as they can.

Credit Score – Your credit score plays a significant role here. It will have an impact on your final mortgage rate, in some instances your down payment requirement, or whether you are qualified at all for a mortgage. Borrowers with the best credit scores generally will get the lowest mortgage interest rate. Therefore it makes sense to put a lot of work into improving your financial status.

The good news though is that it is not that hard to improve your credit scores in as little as 6 months or less. There are creative ways to do it yourself and even some reputable services out there who know how to get your scores raised for you.

Do your best to target a score of 680 or above. There are lenders that can find a bad credit mortgage for you with scores as low as 500 but then your down payment requirement and your rate will be much different.

Credit Events – A credit event is a bankruptcy, foreclosure and in some instances collections. If you have a bankruptcy or foreclosure, your lender needs to know up front so he or she can plan for this. It is preferable to have had these two years prior to applying for a loan.

Less than two years out of bankruptcy for example will prevent you from getting an FHA loan. Collections need to be dealt with. Pay outstanding collection amounts and work to have them removed from your credit report. That can be negotiated with the creditor as part of the payment agreement.

Large Payments on Your Credit Report – Too often potential home buyers fail to qualify because they have too many other minimum monthly payments showing up on their credit report. During the qualification process, lenders need to factor your future mortgage payment as well as the monthly obligations that appear on your credit report.

Together, and when divided into your gross monthly income they make your debt to income ratio (DTI). Each loan program has a maximum DTI allowed. The less that you have in OTHER monthly payments on your credit report, the larger the loan you will be able to qualify for.

In this example, you can see that with a gross monthly income of $6,500, this person would qualify for a $300k loan at current rates using a maximum DTI of 43%. At the bottom, you can see how much more buying power this person has when the other monthly payments are removed.

This example above should hopefully explain why it is important to keep your credit report free from other monthly obligations. If you think there is a chance that you may buy a home in the near future, then do not buy a new car. At least not without discussing the implications with your lender.

In the example above, the person could afford $88k more if there was no car payment when applying for the loan.  The truth is that auto lending is much more lenient when it comes to qualifying. Once you are approved and close on your home loan, there is an excellent chance that you can then go and buy the car you want.

RESERVE FUNDS

The cash needed to buy a home is not just about the down payment and closing costs. Lenders will require a few months’ reserves (check with your lender). They want to be sure that if you have a job loss that you can at least make a few payments before you are out of money.

Realistically, you need to plan for a lot more than that. When you buy your home, do you think you may need some money to fix it up the way you want? Even with new construction, there are expenses.

Do you need to buy furniture? Do you own basic home needs like a lawn mower? This is also part of the planning process. Throwing everything you have into your initial purchase without anything left over makes you “house poor” and with one small setback can land you in a very difficult scenario where you could lose your home.

FINAL PERSPECTIVE

Once you have this plan developed with the assistance of a lender, then you can target price points and specific towns or neighborhoods. You will be able to spend time focusing on homes that are a true reality for you.

Developing a plan far in advance and sticking to it will also help make the home buying process much easier and will take the stress out of finding a mortgage. Your realtor will also be pleasantly surprised to know that you have taken the time to make sure you have the ability financially to purchase the home.

If you are thinking about looking for a home at some point in the future, contact a lender today to have a preliminary discussion.

Is This Your Situation: Looking for the Best Home in Your Budget?

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You’re neither rich nor poor, and you’re ready to buy your first home. You look around—all those homes on the market, but they all seem priced out of reach.
Cheer up. You’re not alone. With some solid real estate counseling and some help from your lender and/or sellers and others, you can not only get your foot in the door, you can own the house too. It just takes some creativity, a few inside tips and a bit of homework.

Examine Your Goals

How ironclad are your dreams? Can your dream of a formal dining room or a hot tub on a redwood deck be postponed? Must you have a two car garage? Lowering your expectations and starting out modestly (in decent housing that meets your needs) can lead to owning those dreams in time.

Start Saving

Get your priorities straight. Without taking all the fun out of life, what’s more important to you, weekends on the road and dinners out or stashing away at least part of your down payment? (Most lenders want to see that some of the money you invest is your own.)

Keep Your Credit Record Clean

When you go mortgage shopping, lenders will be looking over your payment records. Don’t let a late-payment habit rise up to haunt you. (Reformed late-payers can request creditors to erase the blots on their records—for a small fee).

Look for Financial Assistance

Your parents and other relatives may be able and willing to give you gifts that will get you over the down payment hurdle. (Loans from relatives will be counted as debts and will lower a number of mortgage payments your lender will allow you to carry).

Get Some Co-Signers

Parents, relatives (and unrelated investors) can either co-sign a loan or share the ownership of your home. With shared ownership, you’ll be the resident but your co-investor may share specified expenses (plus tax advantages and equity accrual) and will share in your profit on the sale.

Shop for Mortgage Loans

Qualifying for a mortgage can be managed in several ways to fit your down payment and monthly payment abilities. FHA and VA loans come with low down payment requirements, and lenders offer ARMs (adjustable-rate mortgages) at initially low-interest rates. (Look for an ARM that can be converted to a fixed rate should rates drop).

Consider Creative Financing

Also, new-home builders and other sellers may offer buy-downs that lower your interest rate in the first few years of a mortgage, thereby making a home more affordable. Balloon loans (if they have at least a 7-year term) can often bridge gaps and give you time to accumulate equity and/or cash to pay them off. Home sellers can sometimes help you financially—with a lease-purchase arrangement or a take-back loan. Lenders and sellers are constantly creating new ways to help buyers buy homes. We can help you check them out.

Look at Starter Homes

Once freed of the vision of “instant dream home,” you can look for housing that will start you on the equity-building path to realizing your dream. Condominiums and townhouses are often much less expensive than detached houses and buying one now can serve well as a stepping stone.

Search for Bargains

If you’re handy with tools, a fixer-upper home gives you the opportunity to buy inexpensively. Fix it up and in a few years, trade up. If you’re adventurous, auctioned properties in suitable neighborhoods can also be good values. If you don’t mind a longer commute to work, outlying areas frequently offer homes at lower prices than those found close to town.

Whatever route you choose toward buying your first home, keep cool. It may take time to find the right combination of elements, but there is a home out there for you and a way to obtain it. We’ll be happy to help you create your path to its door.

Call or email us today to help you discover the best home that your budget can buy.

Preferred Properties of Texas

(254) 965-7775|Contact Preferred Properties of Texas