This is a question asked by everyone that starts to look for a house. So how do you find out what you get for a certain price?
First I'd take your established price range and with your realtor mark areas of town where homes are selling in that range. At this point be very broad, you don't need to pinpoint by exact street. There's no reason to be closing options this early in the game.
Once you have the areas, do you see any that are not desireable because of location? Too far from work, family, downtown, etc. Any other areas that are a definate No for any other reason?Go ahead and mark these off the list. If you're familar with all the areas on the list you can skip the next step.
If you're not familar with the areas it's time to take a drive through them to get to know them better. This can be in an afternoon or over the course of a week or two depending on your schedule.
Have you realtor pull some listings in each of the chosen area(s). It may only be one area and that's fine. Get a good sampling of homes for sale so you can get a good feel for the houses there. Take some at the low end, the high end and the middle of the market. Are they big? Small? New? How many bedrooms? Garage?
Now that you've got a basic feel for the homes it's time to figure out what you're looking for. This differs from person to person, but also in area to area. For instance, if you're looking in a newer community the age of the home is very important. However if you're looking in an older neighborhood it doesn't matter very much if the house was built in 1944 or 1950.
After deciding on what is important, compare that to the areas. Do they match up? If so, you're on your way towards searching for a house! If not, reassess your needs and/or the areas until you've got a match.
For some this process is very quick. For others it can take a while. But for everyone it's a good way to 1) get to know the market and 2) realistically assess what you're looking for in a house.
I'm a real estate broker in Austin and would be happy to sit down with you to discuss buying a home or planning to buy a home. Bill Conover, Broker 844-1910
Thursday, April 23, 2009
Wednesday, April 1, 2009
How much house can you afford
When starting to search for a new house one of the most important items to know is how much you'd like to spend. Sure you'd like to spend one dollar, so let me rephrase that. How much would you realistically like to spend? Fannie Mae underwriting guidelines use a "Debt to Income" ratio (DTI) when approving a loan. Currently they cap the DTI at 41%. DTI is based on monthly debt to monthly income. So to figure how much you can spend on a house payment multiply your monthly income by 41% and subtract your non-housing monthly payments (car loan, credit cards, student loans) from that amount. The result is what you could spend on housing and be approved for a mortgage.
I've emphasized 'could' as that doesn't mean you should spend that much, but that's the maximum the guidelines would allow. Now that you know what you have to spend on a house you'll need to decide what payment amount you'd be comfortable with. The last thing you want to do is to get into a situation where all your income is going out each month and you don't have extra for savings, retirement, travel, etc.
After you decide on a good number you can use the following to figure out a home price. A mortgage payment (including taxes and insurance) is roughly just less than 1% of the sales price. So if you'de like a payment of $1800 that would be for a roughly $200,000 house. These are rough numbers as interest rate, taxes and down payment are all TBD. For an accurate quote please email me, I'm happy to run some numbers for you.
The next thing to think about is since you've found a price range, can you get what you want in that price range? I'll be covering this next month so be sure to stop by my blog in early May.
I've emphasized 'could' as that doesn't mean you should spend that much, but that's the maximum the guidelines would allow. Now that you know what you have to spend on a house you'll need to decide what payment amount you'd be comfortable with. The last thing you want to do is to get into a situation where all your income is going out each month and you don't have extra for savings, retirement, travel, etc.
After you decide on a good number you can use the following to figure out a home price. A mortgage payment (including taxes and insurance) is roughly just less than 1% of the sales price. So if you'de like a payment of $1800 that would be for a roughly $200,000 house. These are rough numbers as interest rate, taxes and down payment are all TBD. For an accurate quote please email me, I'm happy to run some numbers for you.
The next thing to think about is since you've found a price range, can you get what you want in that price range? I'll be covering this next month so be sure to stop by my blog in early May.
Tuesday, March 31, 2009
When to refi
Typically homeowners will refinance their current mortgage for one of two reasons: to get a lower rate and payment or to cash out on some equity. Since rates are so low now I'll only discuss the first. The first step when thinking about a refi is to see what your loan characteristics are currently. This is the rate, the term length, whether there is mortgage insurance, loan amount, any seceondary financing and whether there are escrow accounts or not. Now that you have this info it's time to contact a lender and get a loan quote.
The lender will need the above info as well as your plans for staying in the house. Do you plan on being there 5 years, 10 years, forever? Or maybe you plan to move in 3 years but will rent it out at that point. This gives a time frame for comparing refinancing vs not refinancing.
The lender can then give an estimate of where the rates and terms are for available financing given your scenario. There are closing costs involved in refinancing so it's good to find the 'break even point'. This is when the interest you save each month is cumulatively enough to reach the amount of closing costs you pay.
For example: Let's say closing costs are $5,000 and the interest savings per month is $200. You'd need to keep the loan for $5,000/$200 = 25 months for the refinance to be worth it.
As you'll be estimating how long you'll be in the house and can't name a specific month, I like to give a cushion of 6 months to a year when deciding whether it's worth it. In the above example, if you said you'd be in the house 2 1/2 years, I'd advise that it's probably not worth it as you may very well move before the break even point. Alternatively if you planned on staying 3 years, I'd say it'd be worth refinancing then.
There are a few more steps and info needed to get a proper rate quote from the lender, but once that's accomplished we'd go through the above process. If you think your rate may be a little high, give me a call. I'd be happy to discuss.
-Bill 512-844-1910
billconover@america-lending.com
The lender will need the above info as well as your plans for staying in the house. Do you plan on being there 5 years, 10 years, forever? Or maybe you plan to move in 3 years but will rent it out at that point. This gives a time frame for comparing refinancing vs not refinancing.
The lender can then give an estimate of where the rates and terms are for available financing given your scenario. There are closing costs involved in refinancing so it's good to find the 'break even point'. This is when the interest you save each month is cumulatively enough to reach the amount of closing costs you pay.
For example: Let's say closing costs are $5,000 and the interest savings per month is $200. You'd need to keep the loan for $5,000/$200 = 25 months for the refinance to be worth it.
As you'll be estimating how long you'll be in the house and can't name a specific month, I like to give a cushion of 6 months to a year when deciding whether it's worth it. In the above example, if you said you'd be in the house 2 1/2 years, I'd advise that it's probably not worth it as you may very well move before the break even point. Alternatively if you planned on staying 3 years, I'd say it'd be worth refinancing then.
There are a few more steps and info needed to get a proper rate quote from the lender, but once that's accomplished we'd go through the above process. If you think your rate may be a little high, give me a call. I'd be happy to discuss.
-Bill 512-844-1910
billconover@america-lending.com
Monday, March 2, 2009
$8000 homebuyer credit
Legislation was pass as part of the stimulus package for a new tax credit for homebuyers. The new credit is $8,000 and is a true credit that does not need to be repaid. This is much different than the previous $7,500 credit, which had to be paid back to the IRS.
As it stands now, it’s free money. This will be a great deal to take advantage of. If you’re thinking about buying, give me a call and we can discuss options.
There are a few stipulations to the credit and I’ve outlined the main ones below:
As it stands now, it’s free money. This will be a great deal to take advantage of. If you’re thinking about buying, give me a call and we can discuss options.
There are a few stipulations to the credit and I’ve outlined the main ones below:
- Buyer must be a first time homebuyer
- Credit is the lesser of $8,000 or 10% of sales price
- If buyer keeps house 3 years, credit does not need to be repaid. If owner sells before 3 years is up, the full amount needs to be repaid
- Must purchase before December, 1 2009
- Income must be lower than $75,000 for filing single and $150,000 for filing jointly
- Credit is taken when you file your tax return
Monday, November 24, 2008
Estimated Payments
A good step to take before you start planning on buying a house is to get a good idea of your monthly payments will be. You can figure out what payment you are comfortable with, and then can see what price range of home you'll be looking at.
As a general rule the total payment including taxes and insurance will be just under 1% of the sales price. There are a couple things to keep in mind though.
First, this is just a rough estimate. Interest rate, insurance and property taxes are all variables. So please use it as a general guideline, not an exact calculator.
Second, the further that you move higher than $150,000 the rule becomes less and less than 1%. For example, at $150,000 the payment may be $1400, but for a $400,000 house the payment would be $3200.
Third, this is assuming a down payment of 5%. A larger down payment will lower the payment further.
Fourth, this is not for condos. Condos will be a little more because of HOA dues.
If you want to calculate an actual payment, please go to my mortgage calculator on my website www.america-lending.com.
Hope that helps!
As a general rule the total payment including taxes and insurance will be just under 1% of the sales price. There are a couple things to keep in mind though.
First, this is just a rough estimate. Interest rate, insurance and property taxes are all variables. So please use it as a general guideline, not an exact calculator.
Second, the further that you move higher than $150,000 the rule becomes less and less than 1%. For example, at $150,000 the payment may be $1400, but for a $400,000 house the payment would be $3200.
Third, this is assuming a down payment of 5%. A larger down payment will lower the payment further.
Fourth, this is not for condos. Condos will be a little more because of HOA dues.
If you want to calculate an actual payment, please go to my mortgage calculator on my website www.america-lending.com.
Hope that helps!
Monday, November 17, 2008
Escrow accounts
Escrow accounts are accounts that lenders set up to recieve payments from borrowers to use to pay property taxes and homeowners insurance. In this way a borrower can send in 1/12 of the yearly tax and insurance bill each month instead of coming up with the full amount at the end of the year.
When you put down less than 20% as a down payment, the lender will require you to have escrow accounts. The lender wants the escrow accounts as they can be sure the taxes and insurance are paid on time. They also collect interest on the money.
If you put down at least 20% (or get a second loan so your first LTV (Loan To Value) ratio is less than 80% of the price) you can elect to waive the escrow accounts. Since the lender doesn't get to collect interest on that money any more they charge a fee, usually 0.25% of the loan amount.
At closing lenders also collect 3 months worth of taxes and insurance as a buffer against rising taxes and insurance. They are regulated by the Federal government on how much they can hold in escrow. So if your taxes drop, you should receive a partial refund from the lender. Conversely if they go up, your escrow payments will increase.
For most borrowers escrow accounts are a good idea as the payments are spread throughout the year and it's easier to let the lender handle it. However, for some it's preferable to pay the fee so that they can make interest on their own money.
I'd be happy to look at any loan scenario you may have. Just email me billconover@america-lending.com.
When you put down less than 20% as a down payment, the lender will require you to have escrow accounts. The lender wants the escrow accounts as they can be sure the taxes and insurance are paid on time. They also collect interest on the money.
If you put down at least 20% (or get a second loan so your first LTV (Loan To Value) ratio is less than 80% of the price) you can elect to waive the escrow accounts. Since the lender doesn't get to collect interest on that money any more they charge a fee, usually 0.25% of the loan amount.
At closing lenders also collect 3 months worth of taxes and insurance as a buffer against rising taxes and insurance. They are regulated by the Federal government on how much they can hold in escrow. So if your taxes drop, you should receive a partial refund from the lender. Conversely if they go up, your escrow payments will increase.
For most borrowers escrow accounts are a good idea as the payments are spread throughout the year and it's easier to let the lender handle it. However, for some it's preferable to pay the fee so that they can make interest on their own money.
I'd be happy to look at any loan scenario you may have. Just email me billconover@america-lending.com.
Sunday, November 2, 2008
Closing Costs, how much are they?
As equally important as interest rate is closing costs when choosing your mortgage loan. Closing costs are different for each lender and the amount is inversely related to interest rate. So the higher your closing costs, the lower your rate and vice versa.
Closing costs can be broken down into two categories: lender fees and third party fees. Lender fees are those that are charged by the lender and therefore the lender has control over these fees. It's very helpful to know this when comparing loans from different lenders. Lenders have to assume what the third party fees are and their assumptions are not always the same. So to compare use lender fees and rate and take out third party fees. Third party fees will be the same independent of the lender you use.
I'll start with lender fees. There is typically an Underwriting fee, a Processing fee, a Tax Service fee, a Document Prep or Attorney fee, and an Application fee. These fees vary from lender to lender but here are there rough ranges. UW fees are $400 to $700, Processing is $350 to $550, Tax service is around $100, Doc Prep from $85 to $350 and Application is $250 to $450. A lot of times the Application fee will cover the appraisal and credit report.
So expect between $1,200 and $2,000. Of course the lender can work these into the rate if they wish, please see my previous post for more info.
Third party fees include: Title policy, Title Escrow fee, Survey, Recording Fees, and HOA transfer fees. The owner's title policy is paid by the seller in Texas, but the buyer is responsible for paying for the Lender's title policy to cover their interest in the property. This is usually $100 to $250. The Escrow fee is charged by the title company to handle the transaction and is $200 to $400. Surveys are $440, but many times the seller will already have one that you can use for free. Recording fees are $150 or so. HOA fees are $200 to $600, this is only applicable if the property has a Home Owner's Association.
On average you're looking at about $650 if there is an existing survey and there is no HOA.
The total of all closing costs will then be between $2000 and $3000. There are also items that you pre-pay at closing, called you guessed it "pre-paids". Items such as interest, insurance and taxes. I'll cover that in a post later, so please check back next month.
Closing costs can be broken down into two categories: lender fees and third party fees. Lender fees are those that are charged by the lender and therefore the lender has control over these fees. It's very helpful to know this when comparing loans from different lenders. Lenders have to assume what the third party fees are and their assumptions are not always the same. So to compare use lender fees and rate and take out third party fees. Third party fees will be the same independent of the lender you use.
I'll start with lender fees. There is typically an Underwriting fee, a Processing fee, a Tax Service fee, a Document Prep or Attorney fee, and an Application fee. These fees vary from lender to lender but here are there rough ranges. UW fees are $400 to $700, Processing is $350 to $550, Tax service is around $100, Doc Prep from $85 to $350 and Application is $250 to $450. A lot of times the Application fee will cover the appraisal and credit report.
So expect between $1,200 and $2,000. Of course the lender can work these into the rate if they wish, please see my previous post for more info.
Third party fees include: Title policy, Title Escrow fee, Survey, Recording Fees, and HOA transfer fees. The owner's title policy is paid by the seller in Texas, but the buyer is responsible for paying for the Lender's title policy to cover their interest in the property. This is usually $100 to $250. The Escrow fee is charged by the title company to handle the transaction and is $200 to $400. Surveys are $440, but many times the seller will already have one that you can use for free. Recording fees are $150 or so. HOA fees are $200 to $600, this is only applicable if the property has a Home Owner's Association.
On average you're looking at about $650 if there is an existing survey and there is no HOA.
The total of all closing costs will then be between $2000 and $3000. There are also items that you pre-pay at closing, called you guessed it "pre-paids". Items such as interest, insurance and taxes. I'll cover that in a post later, so please check back next month.
Subscribe to:
Posts (Atom)
