South Austin Texas Real Estate blog: February 2009

Why rent when you CAN buy?  Why pay someone else's mortgage for them?  When you're a renter, you're doing just that--making your landlord a nice little nest egg for his or her retirement!  

Much ado is being made in the news today that the banks aren't lending money and that no one is able to secure a mortgage.  Well, let me tell you--Not ONE of my clients turned down for a mortgage during this last year!  Banks ARE lending money and chances are you can own your own home for the same amount that you're paying in rent.  With interest rates at a historical low right now, it's a great time to secure that mortgage and purchase your OWN home!

This is the first in a series of articles to get you started on your way to taking pride in homeownership.  

5 Reasons to Own Your Own Home

1. Tax breaks:   The U.S. government allows you deduct the interest which you pay on your mortgage, your property taxes, as well as some of the costs involved in purchasing your home.  This benefit continues each year of homeownership.  As well, currently there is a $7,500. federal tax credit which will be applied to the purchase of your home.  Inquire with your Realtor® or Lender.  

2. Appreciation:   Despite the current economy, real estate has long-term, stable growth in value in general.  While year-to-year fluctuations are normal, median existing-home sale prices generally increase and have  increased 88.5 percent over the last 10 years, according to the NATIONAL ASSOCIATION OF REALTORS®.  The number of U.S. households is expected to rise 15 percent over the next decade, especially with the purchase of a home at today's low prices.  Yet another benefit in the building of equity in your home, is the ready-made savings plan;  when you sell, you are allowed take up to $250,000 ($500,000 for a married couple) as gain without owing any federal income tax.  Consult your CPA regarding any tax questions you may have.

3. Equity:   Money paid for rent is money that you’ll never see again, money used to pay your landlord's mortgage!   Conversely, mortgage payments allow you build equity ownership interest in your own home.

4. Predictability:  Unlike rent, your fixed-mortgage payments don’t rise over the years so your housing costs may actually decline as you own the home longer. However, keep in mind that property taxes and insurance costs will increase.   Also, remaining in one neighborhood for several years gives you a chance to participate in community activities, lets you and your family establish lasting friendships, and offers your children the benefit of educational continuity.

5. Freedom:  The home is yours!   You may decorate any way you want, have pets, build a storage building on your property (with permission from your HOA), landscape to your heart's content and benefit from your investment for as long as you own the home. 

Calculate whether buying IS the best financial option for you by utilizing this “Buy vs. Rent” calculator.

Should you be ready to buy before the series is complete, please don't hesitate to phone or email me for the remainder of the information to get you well on your way to homeownership!  

Don't know what your credit score is?  Read this.

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About the author:

Debe Maxwell is a Charlotte Residential Real Estate Broker, Certified Neighborhood & Relocation Specialist, ABR & e-PRO who can assist you with the purchase and/or sale of real estate in the Charlotte NC Metro Area.  If you're relocating to or from any other area of the country, Debe connects you with any member of her team of relocation professionals in your destination or exit city of choice.  The destination service is of no cost to you!  The Maxwell House Group's quality service guarantee puts this team far ahead of the competition; providing unsurpassed customer service is their #1 priority!  Debe Maxwell -- Helen Adams Realty -- 704.491.3310

Copyright© 2009 By Debe Maxwell, All Rights Reserved...**First Time Homebuyer Handbook, Part I**

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Disclaimer:  All information provided by this author is strictly an opinion, is not guaranteed, may be based on information collected from several sources, which may or may not be deemed reliable at the time of researching this article and may be time sensitive.

Let's go shopping for Charlotte NC homes for sale!

It has been an interesting week for me. Earlier in the week as part of our radio presence we interviewed Senator Isakson about housing. I have posted that with a link to the interview earlier. Today I attended a meeting where the speaker was from the Federal Reserve.

I am an X banker so I was able to follow his discussion and later able to ask questions. I am writing this blog to sum up what was said, as it is important to us in the industry

The Current Crisis;   From the standpoint of the Fed the current crisis had its' immediate cause in the housing market slow down and bubble bursting. However even though that was the immediate cause the real problem was in the CDO's. So for example if a group of mortgages was bundled and sold all was fine. But what happened was that the bundle was split. So the top part may have been sold off at AAA rating the middle at A or BB and the bottom at B. Each decline in rating had a corresponding increase in yield. The assumption of finance managers was that even the lower rated mortgages were good enough to buy as they were backed by the Asset of the home.

Now the fun begins. All are making money, and want to make more, and decide lets take that second group , the A or BB rated one and take the top off it and make it AAA. And so it goes with division after division of these things. In the end the bottom of the bottom are your toxic assets. Enter the slow down.

What happens here is the assets become less liquid. Banks start to worry about lending and suddenly credit freezes up. Because NO one lends. This is what we saw in September of 08. As we were good enough to sell bundled mortgages all over the world everbody starts to freeze up. In fact the Fed lends to foreign banks so they can buy dollars to meet obligations.

Now the Fed believes that the real problem we face is the valuation of the toxic assets. In fact it was pointed out that the Nobel Prize in economics a couple of years ago went to a guy who developed an auction system for these things. If you cannot value the assets on your books whether you manage a hedge fund or a bank then how credit worthy are you as an institution?

Interesting enough as the questions were asked the Fed does not believe the swaps (CDS)  will be a problem They feel these will be treated as a commodity as they are today and not have any real effect. Also the pumping of the money into the system as long as it does what it is supposed to do is not going to be inflationary. However it was pointed out that the down side risks at this point out number the upside risks. 

As to where the Fed was while this crisis was building , the short answer was they were snoozing. They do not want to regulate this type of risk. However I can tell you in banking they heavily regulate risk when it comes to foreign banks so I am not sure why this should be so different.

So at the end of the day there is a valuation issue to be resolved and the feeling is once that happens assuming there are no more shoes to drop things should start to stabilize over the summer and improve next year

What is it about the members of the media, the House of Representatives, the Senate and the Office of the President that makes them believe that the American public still believes in smoke and morrors?

     They continue to claim that "it (the economy) is all about "confidence".

     They say that the American consumer needs a "signal" that the future will improve.

     One Senator claimed yesterday that the American public doesn't care about "little pork" in the stimulus bill.

     We're heard the word "change" ad nauseam for two years.

     Congress believes that the public is impressed and comforted when we see them exhibiting "outrage"when questioning the big bank CEOs.

CONFIDENCE?  What gives the American citizen confidence is knowing that they will be able to keep their home.  The stimulus bill has nothing to make the home owner more confident that they will not be in foreclosure or bankruptcy next year.

SIGNALS?  The only signal from the stimulus bill is that Congressional members will tax us about $800,000,000,000 to consolidate their power with pay-offs to political supporters. 

"Little pork" means that the pork is spread in small amounts to more recipients. 

• $600 million will buy more and newer cars for government bureaucrats.
• $44 million to refurbish the Department of Agriculture,
• $50 million for the National Endowment for the Arts.
• $150 million to spruce up the Smithsonian buildings.

CHANGE?  In many ways, this was an honest promise.  Not that we were ever advised in any way just what was going to be changed from what to what.   However, things will, indeed, change. 

     Taxes will go up as the bill for the $800,000,000,000 spending package begins to come in.

     Spending power will go down as the cost of goods and services continue to increase.

     More home owners will be foreclosed as unemployment continues to rise and home owners cannot refinance ARMs, relocate for employment or sell homes an live on retirement income.

     Interest rates will go up as the government takes more available funds to finance spending programs including (little pork).

OUTRAGE?  Americans are outraged when we see a Congressman complain to Big Bank CEOs about an ATM that ate his debit card when those CEOs cannot describe their use of TARP money. 

YES, THINGS WILL CHANGE.

                             

                              "Honey, was there anything in the stimulus bill to help our family."

                             "I don't believe so Dear, we'll get $800 but our taxes will go up more."