This will impact you if you are in the market to buy or sell real estate right now!
Hello,
We hope this message finds you doing well.
In light of current, quickly evolving economic circumstances, here are some important considerations that will impact anyone thinking of financing the purchase or sale of real estate.
Context
Once most real estate loans close escrow, they're sold to investors. Numerous individual loans are packaged together into a securitized mortgage instrument called a Mortgage Backed Security (MBS). Mortgage Backed Securities are then sold to investors. The investors are then called creditors.
Today, many Mortgage Backed Securities have been purchased by international governments (i.e. China and Germany). China is now the largest creditor of the United States. The United States is now the world?s largest debtor nation. China and other creditors are very concerned about the United States? ability to pay its financial obligations.
National economic news stories have recently broadcast and/or printed the following:
From Jan. 2009 thru Mar. 31, 2010, the Federal Reserve will have spent more than $1 trillion purchasing real estate loans. The Federal Reserve is scheduled to discontinue this practice within the next eight weeks. Withdrawal of the Fed's intervention may trigger inflation and higher interest rates.
FAQs: MBS [Mortgage Backed Securities] Purchase Program
. . . the program to purchase agency mortgage-backed securities (agency MBS) was announced by the Federal Reserve on November 25, 2008. On Wednesday, March 18, [2009], the FOMC [Federal Open Market Committee] announced the expansion of the Federal Reserve's program to purchase agency MBS up to $1.25 trillion by the end of the year. On September 23, 2009, the FOMC announced that the Federal Reserve will purchase a total of $1.25 trillion of agency mortgage-backed securities and gradually slow the pace of these purchases, anticipating they will be executed by the end of thefirst quarter of 2010.
When did the purchases begin?
Purchases began in early January 2009 and will continue until the end of the first quarter of 2010.
Early in 2009, Pres. Obama stated publically that the United States was out of money. That's why it's called a deficit, he said. As long as the Federal government continues printing money that has no sound financial backing and as long as Federal spending continues, the national deficit will increase and the value of the U.S. dollar will continue to fall.
Once Federal stimulus monies and funds for entitlement programs are finally exhausted, the harsh reality of the U.S. being the largest debtor nation in the world will be very evident. Such a triple whammy may give rise to increased inflation and higher mortgage interest rates.
Sellers who must, or want, to sell must get real about their asking price.
§ No showings, it's the price
§ Showings, but no offers, it's the price.
§ Offers but no closing, it's the price . . .
It didn't appraise for at least the full sales price (a contractual requirement in Texas).
If interest rates increase, the potential buyer pool will diminish and over-priced listings will remain unsold. Over-priced listings benefit no one.
If you must, or want, to sell a property, please contact us right away.
1) Immediately get pre-qualified by a competent lender,
2) Contact us to discuss, select, review and view desired property(ies) to put under contract,
3) Lock the interest rate with the lender before Mar. 31, 2010.
If buyers don't act quickly and interest rates increase, buyers may find themselves unable to qualify for a loan at the higher rate.
Caution:
Short Sales require creditor(s) approval.
Since it may take weeks or months to obtain creditor approval . . .
And, creditor approval might never be granted . . .
Serious buyers desiring to ensure they're under contract by Mar. 31, are encouraged to avoid the high risk and prolonged process of Short Sale listings.
Lender
It's imperative that buyers deal with a competent lender who knows the Texas real estate contract, one who will fund and close on time. If you'd like the names and/or contact information for a couple of lenders, please feel free to call or send us an e-mail. (Brazos County Realty accepts no, kickbacks from any lender.)
If you have questions or if you know anyone looking to buy, sell or invest in real estate right now, please call or send an e-mail with their contact information. We'd be happy to contact them right away. Your referrals are always appreciated.
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PACKING TIPS Packing Tips It is strongly recommend that you PLAN your move as far in advance as you can. Hear is a 6 week Planning Checklist from Mayflower. MOVING SUGGESTIONS AND TIPS Great Tips for the Move These moving tips for an Elders Quorum helping people move in, out or across town. They can be used by anybody preparing to move. Quorums may find it useful to alter this list to meet their needs and distribute it to families who are about to move. For moving companies click on 'Resources' at the top of the page in maroon, then 'Movers and Haulers'. THE 10 MOST FORGOTTEN ITEMS IN A MOVE What Did You Forget? LEVERAGING YOUR MONEY One of the greatest financial aspects of buying a home is the ability to leverage your money. Simply put, leverage allows you to use a small down payment and financing to purchase a larger investment. For example, if you bought a $125,000 home with 10 percent down, you leveraged the $12,500 down payment to purchase an asset worth 10 times that amount! The benefits of leverage really become apparent with appreciation, or the rise in value of a property. Using the above example, say you were to live in the house for 5 years, and during that time property values in your area were to rise an average of 2.5 percent a year. Your home would then be worth over $141,000. By putting only 10 percent down, you get to enjoy the appreciation for the full amount! In addition to the 10 percent down, you'll also have to make mortgage payments. But with each payment, a certain amount of money is being used to pay down the principal balance that you owe. This is called building equity. So in the event you sell your house, not only can you realize a profit from your leveraged money, you also have a chance to pay yourself back for the money you've put in over the years. No wonder so many people consider a home an excellent investment!
