Think It’s All About Prices and Rates? Think Again…

Many buyers think mainly (or only) about real estate prices and mortgage/interest rates. But don’t forget one very important thing – the ability to obtain financing. Unless you’re paying cash, the ability to get financing will directly affect your ability to buy real estate.

In a recent Fed survey, due to the credit crisis of recent years, 75 percent of banks tightened their standards for prime mortgages during the second quarter of this year. Of the 32 lenders that were writing non-traditional loans such as interest-only loans, 85 percent said they’d tighten standards. As for sub-prime lenders (of the few that are left), 86 percent said they had tightened standards in the last three months.

What does this mean to you as a home buyer?

1. Your previously good credit score is no longer good enough to qualify. Credit (FICO) score requirements are one of the first things lenders tighten up on.
2. More money out of your pocket for a down payment. Trying to get a 5-percent down loan these days is next to impossible. You’re looking at 10, 15, 20 sometimes 30 percent down minimum.
3. Work history, 1099 contractor documentation and other back-end requirements are being tightened up on. What was ok before may not be good enough now or tomorrow.
4. If you previously qualified, but are now on the fine line (or over), the lender may say "ok," but you may be stuck with a higher interest rate and/or higher closing costs than before.

If you do not qualify under the new (or future) tighter standards, neither prices nor interest rates will matter.

You will either pay a higher interest rate due to being "higher risk" based on the new guidelines or you won’t be able to buy at all. And the decrease in your monthly mortgage payment you hoped lower prices would bring may be wiped out once you factor in the higher interest rate’s effect on your monthly mortgage payment.

It’s not only about real estate prices and interest rates. Don’t get caught up on just one factor and get blind-sided by the other(s).

Source: InmanNews

Loudoun May Increase Zoning Fees – Offset Costs or Curb Development?

Loudoun County is considering drastically increasing rezoning fees. This will directly affect individual landowners and developers as well as future home buyers. Why? Because it will increase the cost of new construction homes on land rezoned to residential or higher-density (e.g. rezoning from single family homes on 3+ acres to clusters of town homes).

Currently, developers and other landowners who submit a rezoning application must pay Loudoun County a processing fee of $15,730, plus $80 for each acre above 200 acres for properties that exceed that size.

Under a proposal endorsed last week by a Board of Supervisors committee, the base fee would jump to $35,605 for residential rezonings and $27,723 for nonresidential rezonings.

The rezoning application fees are among several land-use fees that the board is expected to consider raising this fall.

Some say that the increase in fees will put an added burden on property owners and small businesses. Others say that the increase in fees is necessary and overdue (fees haven’t been raised since the early 1990′s).

Is this increase, among others, being considered in order to offset costs to the county or to curb building and development? What do you think?

Source: Washington Post

Eat Out In Loudoun To Help Pay For Schools?

Eat out in Loudoun County in order to help pay for schools? Sounds odd, doesn’t it… Well, that’s what Loudoun is proposing – a 4 percent meal tax on "prepared meals" that will go directly to Loudoun County public schools.

Loudoun County officials are even saying that the money generated from the meal tax could replace property taxes. (Do Loudoun residents really eat out that much?!)

The referendum will be on the ballot in November so you have plenty of time to chew on it before voting on it.

Source: NBC4.com

Mortgage Rate Round-Up – August 9, 2008

This week saw mortgage rates mixed. Here are the national figures:

• Conventional 30-year fixed-rate mortgage rates rose slightly to a national average of 6.74 percent
• Jumbo 30-year fixed-rate mortgage rates rose to a national average of 7.68 percent
• 15-year fixed-rate mortgage rose slightly to 6.27 percent
• 5/1 ARMs fell slightly to 6.32 percent
• 1-year ARMs fell slightly to 6.24 percent

Though rates didn’t move much at all, there’s some not-so-good news for borrowers. Fannie Mae announced this week that it will be doubling their "adverse market delivery charge" fee which will be passed on to borrowers.

Source: Bankrate.com

Fannie Mae Doubles Fee To Borrowers

The cost of obtaining a loan just went up for a large number of borrowers. This week, Fannie Mae announced that it will double a fee that it introduced in December to compensate for the risks of doing business in what it calls an "adverse market."

Fannie Mae first introduced the "adverse market delivery charge" eight months ago. At that time, it was $250 per $100,000 borrowed. Lenders paid the fee and passed the buck on to borrowers, either as a charge or as a slightly higher rate.

Fannie just announced that it will be doubling the fee to $500 per $100,000 borrowed, or one-half of 1 percent. That translates (roughly) into an increase in the rate of one-eighth of a percentage point.

The higher fee will be added onto loans sold to Fannie beginning October 1. Because it takes time to sell a loan, lenders will start passing along the higher cost to borrowers almost immediately. Industry professionals say that Freddie Mac will follow Fannie’s lead and introduce higher fees as well.

Loudoun County Real Estate Market Statistics – July 2008

Wondering how the Loudoun County real estate market is doing and what the statistics are? Curious as to how it did last month and how it compares to last month/last year? Well, there’s good news… The Loudoun County real estate market is continuing to improve with inventory going down and buyer demand increasing. Check out the statistics:

Supply/Inventory

• The number of homes/listings that came on the market in July 2008 was 673. This is a 5 percent decrease from the number of homes that came on the market June 2008 (673 versus 709).
• The number of homes that came on the market in July 2008 was 26 percent less than the number of homes that came on the market in July 2007 (673 versus 907). This is a big year over year improvement and indicates continued strengthening in the Loudoun real estate market.

Demand

• The number of homes that went under contract (aka sold) in July 2008 was 550, which is the same number of homes that sold in June 2008. This is a key statistic because July is usually slower than June when it comes to buyer activity and shows that buyer demand is still strong.
• The number of homes that sold in July 2008 was 35 percent higher than the number of homes that sold in July 2007 (550 versus 358). This shows a substantial year over year improvement that has been the general trend in Loudoun County so far this year.

These statistics show that the Loudoun County real estate market is continuing to improve with lower inventory and higher buyer demand.

Next month, August, is typically one of the slowest months in real estate so we should see a "seasonal" slow down in buyer demand. But then again…that’s what they say about July too and July showed no slow down in buyer activity whatsoever.

Related Articles

Loudoun County Real Estate Market Statistics – 1st Half 2008 vs 2007

Loudoun County Real Estate Market Looking Up! (Come Check Out The Stastistics)

Loudoun Real Estate Inventory Levels Well Below National Average

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