Huntsville Real Estate Blog

Huntsville Veterans Home Buyer Benefits Improve

Huntsville Veterans now have expanded homeownership opportunities, thanks to the Veterans’ Benefits Improvement Act of 2008.

Three provisions in the legislation are critical to help Huntsville veterans during the current housing turmoil. The law will make it easier for veterans who have fallen victim to risky subprime loans to refinance their loans into a safer, more affordable loans backed by the U.S Department of Veterans Affairs. The legislation also extends the VA loan limit increases through 2011, which will help veterans living in high-cost areas. In addition, the VA can now offer adjustable-rate mortgages to veterans. That would make Huntsville homeownership more attainable for military families and personnel who often have to move more frequently than their civilian counterparts.

If you are a Veteran thinking about buying a Huntsville home, please get in touch and we can give you some information on how you can take advantage of the great home purchase opportunities that exist right now.

Learn more about Huntsville homeownership by visiting MoveToHuntsville.com.

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Should I Buy Huntsville Real Estate In These Troubling Economic Times?

The Huntsville real estate housing market has never been better for many potential buyers. In fact, more often than not, it is less expensive to own your own home rather than rent. 

The National Low Income Housing Coalition reports that in 57 out of the 100 most populated metro areas, renting a three-bedroom home is more expensive than monthly costs on a six percent mortgage for a typical low-priced house in the same area. 

With all the news these days concerning the economic crunch and these tumultuous economic times, you might think I’m crazy saying it is a good time to buy a Huntsville home. Of course, home buyers with strong credit are best positioned to take advantage of today’s opportunities. A high credit score will yield a lower interest rate and increase the likelihood that a loan application will be approved. 

For example, a home buyer with a 6 percent mortgage will pay a third less per month than a buyer who has a loan at 8 percent. This difference can be hundreds of dollars per month. 

FHA loans, VA loans and government backed first-time buyer loans are all available to qualified buyers. With the current low interest rates and affordable home prices, it is a great time to buy your Huntsville home. 

It is also a time to keep in mind that buying Huntsville real estate is a long term investment…and an investment you and your family can enjoy for many years!

Learn more about Huntsville real estate at HuntsvilleHomesOnline.com.

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Buying Huntsville Real Estate: Sorting Fact From Fiction

It is easy to think the world is coming to an end as we know it…or at least, the sky is falling…when your pick up a newspaper, listen to the news or logon to the Internet. Yes, we are experiencing troubling economic times, but how do we separate fact from fiction and know if now is the time to consider investing in Huntsville real estate?

Below is an interview with Eric Tyson, know for his books, Real Estate Investing for Dummies, Home Buying for Dummies, Taxes for Dummies and Personal Finance for Dummies. In the interview with Rismedia.com, Eric puts all the doom and gloom reports in perspective:

“Eric Tyson has every right to be opinionated about the media’s treatment of the current market conditions both on Main and Wall Streets. Tyson is a former management consultant to Fortune 500 financial service firms and has successfully invested in real estate for more than two decades. He earned his Bachelor’s degree in economics from Yale and his MBA at Stanford Graduate School of Business.

He might be more recognizable to the real estate community through his authorship and co-authorships of the very successful Real Estate Investing for Dummies, Home Buying for Dummies, Taxes for Dummies and Personal Finance for Dummies. With his insight and candor relative to what we should, and perhaps should never, be doing, we had quite a lively conversation.

Marylyn B. Schwartz: Eric, it’s tough to turn on the TV or pick up a newspaper without feeling like we are all lemmings ready to plunge into the abyss. To hearken to the pundits, this Wall Street mess is going to be the undoing of America as we know it.

Eric Tyson: I could not agree more. Listening to all the hype would lead people to believe that it was nearly impossible to get a home loan. It is harder to get a loan, but hardly impossible. There is a great deal of misinformation. The fact is, real estate is ‘on sale’ now as is stock. While I have no crystal ball about whether we have hit bottom, we are close. It is my contention that this is an excellent time to invest. We all know that buying low and waiting for things to return to more ‘normal’ circumstances is an excellent way to make money. Consumers with good credit will have little trouble finding lenders to write a mortgage. It is a fact that the volume of foreclosures and short-sales are slowing things down, and the fear of the credit crunch has added to the malaise. What we are seeing is a market correction, plain and simple. After the orgy of irresponsible lending by Fannie Mae and Freddie Mac, this was inevitable.

MBS: People are scared that their investments are at risk. When house values have declined significantly in many markets and nest eggs, if small, have all but disappeared, how can we assure people that they need to hang in, not panic and not act without careful guidance and counseling?

ET: We all need to avoid hasty decisions. We cannot afford a 9/11 type mentality. That is, experiencing a crisis and reacting in the short term rather than sitting tight and letting the dust settle. After the tragedy of 9/11, we had economic woes that lasted many years. However, people who invested in real estate then made back their initial investments many times over. Selling a depressed investment is never wise. Fifteen years from now, we will be looking at this time and shaking our heads. However, this economy is a great deal tougher if you are close to retirement. You need to be sure that you are not invested in high-risk markets. One way to measure your portfolio for its level of risk is to take 110 and deduct your age. The result is the percentage of your portfolio that should be in long-term growth assets …stocks, real estate, bonds, etc. These may or may not fit the cautious-investment criteria dependent upon the history of their performance.

MBS: What do you think the biggest misconception is relative to the spin the media places on the financial mess?

ET: This is not the Great Depression. We have to stop comparing the two times in our history. If facts are compared, it is not difficult to determine that where we are today is not where we were in 1929. The stock market decline of 700 points was a result of people listening to the media, panicking and selling off assets or liabilities as they saw them. The next day, the market rebounded significantly, and these same people are wondering if what they did was right or wrong. During the great depression, we had 50% foreclosures as compared with 2.5% or so today. We are suffering with 6% unemployment, yet back eighty years ago unemployment hit 25%. The bailout bill was grossly misrepresented by the media. They failed to liken present-day challenges to other times in recent history when we were in economic crisis. The Resolution Trust Corporation (RTC) that was formed by the US Government in 1989 to liquidate primarily real estate-related assets (including mortgage loans) belonging to savings and loan associations. These assets were declared insolvent by the Office of Thrift Supervision as a consequence of the savings and loan crisis of the 1980s. Between 1989 and mid-1995, the RTC closed or otherwise resolved 747 thrifts with total assets of $394 billion. Many who invested wisely in the consolidation and distribution of these assets realized profits down the road. Instead of it costing the taxpayer 450 billion as initially proffered, it ultimately cost closer to 75 billion. The key point is that we successfully weathered a seemingly insurmountable crisis with far less pain than the media would have had us believe.

MBS: Tough logic to swallow for people who are now having trouble buying food and providing shelter. While in the long run things will right themselves, it is the dark span between crises and leveling that scares most of us. We’re uncertain that we will come out the other end remotely whole…

ET: I understand that. It is in the ‘trenches’ where the pain is most palatable. However, as an economist, it is incumbent upon me to look at every aspect of our economy and determine where, and if, there are reasons to be optimistic. We do have a few strong economic indicators. Exports are up. The weakening of the US dollar aided that segment of our economy. As a result, our GDP grew. We are a resilient economy. We were entering a recession in 2001, and then we saw economic growth bolstered by the strong real estate market. Now we are seeing an adjustment for reasons mentioned earlier. I liken these adjustments to sausage making. While it is an ugly process to watch, the end product is quite palatable. There is far too much ‘daily noise’ that we have no control over. Research shows that the more negativity a person exposes himself/herself to, the more upset and out of control he/she feels. We must do our homework, balance the hyperbole with the facts and hunker down. There is simply no effective way to speed up the pains of an overdue economic correction.

MBS: There are many who are watching this correction with a high level of anxiety. There is ‘skin in the game’ all the way around, and no one wants another misstep no matter how slight. The American public is already reeling from the magnitude of this correction. Let’s hope that the bright spots you have identified continue to grow into a new day.

Marylyn B. Schwartz, CSP, is an expert in real estate and corporate sales training/management and team development. She is president of Teamweavers and a trainer for Leader’s Choice.”

Learn more about Huntsville real estate at HuntsvilleHomesOnline.com or give us a call, 256-508-0211.

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Fannie Mae and Freddie Mac both announced they will not impose the loan fee increase scheduled to go into effect next month. Fees were to have increased from .25% to .5%, making it even more difficult for Huntsville home buyers. The biggest obstacle many ­­­­­­­­­­­­­­­­Huntsville home buyers face is the necessary cash needed for a down payment and closing costs.

Both companies, now controlled by the federal government, had decided to increase fees to boost their finances during difficult times.

Freddie Mac, however, will raise fees next year for riskier loan products, including mortgages that allow interest-only payments for the first few years. Freddie also will require higher credit scores for “piggyback” loans that allow borrowers to make smaller down payments by taking out two mortgages.

Taken together, Freddie Mac said the changes would provide “some relief from the challenges in the current market environment,” but added that it is following lending practices “that are prudent and largely applicable in all market conditions.”

To learn more about buying a Huntsville home, visit MoveToHuntsville.com.

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You can’t turn on a TV, computer or radio these days without hearing about financial crisis America is experiencing and the proposed $700 million dollar government bailout. 

As a long-term investment, Huntsville homeownership is still one of the best investments for individual households.

Everywhere you look, headlines say the housing market is in a free-fall, foreclosures are rising at an alarming rate, and mortgage money is so tight that buyers can’t get a home loan at any price.

In today’s economy, is buying a home and investing in Huntsville real estate a good idea? As a long-term investment, homeownership is still one of the best investments you can make. And the operative word here is “long-term.”

Why is Huntsville real estate a good investment, you ask. The housing market, like all markets, is cyclical and will inevitably have ups and downs. But, homeownership has a track record that is virtually unmatched by any other investment of stocks, bonds or mutual funds.

Despite the current unrest in the mortgage industry, if you have good credit, a job and steady income, you will find there is still plenty of mortgage money to be had at decent interest rates. For well-qualified buyers, rates close to historical lows and the new Housing Recovery Act is offering first-time home buyers a $7,500 tax credit.

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Huntsville Second-home Sellers Pay For Tax Credits

You have probably heard, President Bush recently signed into law the Housing Rescue and Foreclosure Prevention Act. This is the most comprehensive housing bill to be enacted in over a decade. The bill is designed to help more buyers of Huntsville real estate realize their dreams, as well as, boast the struggling housing and mortgage markets.

One of the biggest benefits, and probably one of the most talked about provisions in this legislation, is the $7,500 tax credit to first time home buyers. Tax breaks are all well and good, but they have to be paid for somehow. While first time home buyers are getting a break, second home sellers will be paying for the $15.1 million dollars in tax cuts.

Up until the new legislation went into effect last week, homeowners could exclude up to $250,000 taxable profit on the sale of their home if they’re single taxpayers and $500,000 if married filing joint returns. The catch being, they had to live the in house as their primary residence for two of the five years before it is sold.

Many second home owners took advantage of this by moving into a property that was once a rental or vacation home, live there for two years prior to selling and benefiting from the tax-free profit.

With the new legislation, owners selling on or after January 1, 2009 will have to factor out the period when the property was still a rental or vacation home and pay taxes on that portion of the profit.

Here’s an example courtesy of BankRate.com:

Jim and Joan are in their 50s and next January buy a vacation home for $200,000. Ten years later, they retire, sell their old principal residence and make the vacation home their new principal residence. Fifteen years after that, Jim and Joan, now in their 80s, move to an assisted-living community and sell the vacation-turned-primary-residence for $700,000. That nets them a gain of $500,000.

Under pre-housing bill statute, Jim and Joan wouldn’t face any tax on the entire $500,000 gain. The new law, however, means that Jim and Joan can exclude only 15/25, or 60 percent, of the gain. That would give them $300,000 of nontaxable property sale profit and $200,000 upon which they would owe long-term gain taxes.

As you can see, the new legislation significantly affects second home owners and their retirement strategies. The second home market has remained strong in the last few years, but this may change dramatically in the near future….something congress may not have intended.

If you own Huntsville real estate and are in the middle of converting your second home to your main residence, you could be out of luck. If you don’t have enough time left in 2008 to meet the two year lived-in rule and sell the property, when you do sell next year, you will pay.

If you need to sell your second home before January 1, 2009, give us a call at 256-508-0211. We will help you get the highest price for your Huntsville real estate before the end of the year!

Get the current market value of your Huntsville home.

President Bush signed into law this week The Housing and Economic Recovery Act. This is the most sweeping change to housing reform since the New Deal of 1934. It is designed to assist more Americans invest in home ownership and shore up the faltering housing and mortgage markets. Like any legislation, it comes with the good and the bad. I encourage you to write your Congressmen to see if we can get legislation to revoke some of the bad.  For example, effective October 1, 2008, FHA will increase the minimum required down payment from 3% to 3.5% for Huntsville home buyers. The legislation also calls for the elimination of seller down-payment assistance programs such as AmeriDream and Nehemiah by October 1, 2008.

As of July 14, 2008, upfront MIP premiums became risk-based on credit scores and the annual premium increased across the board. Instead of the original plan of making FHA loans more affordable for potential Huntsville home buyers; the new legislation is doing the exact opposite and makes it more expensive.

Details of the Housing and Economic Recovery Act:

Here are some key provisions of the Housing and Economic Recovery Act that most affect Huntsville home buyers:

• GSE Reform - including a strong independent regulator, and permanent conforming loan limits up to the greater of $417,000 or 115% local area median home price, capped at $625,500. The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).
  View 2009 FHA and GSE loan limit estimates (PDF)

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Before lending you a large sum of money to purchase a piece of Huntsville AL real estate, it is understandable that your lender will want to know a little bit about you and your ability to pay back the loan. If you are a first-time homebuyer, or if it has been a while since you last spoke with your lender, it is helpful to be prepared for some of the questions you may be asked and to have some responses in mind. Below are some general examples of questions you may expect to hear when applying for a home loan:

Employment and Income

•  Where do you work?

•  How much do you make?
 
•  How long have you been at your job?
 
•  How is your income derived — steady salary or irregular income? (if it’s the latter, plan on providing more details so that you get a favorable interest rate)

Outstanding Debts

•  What recurring debts do you have?
 
•  How much do you pay a month for auto loans?
 
Credit cards?
 
•  How much of your monthly pretax income do these debts consume? 

Cash Reserves and Assets

•  How much money do you have in the bank?
 
•  How much will be left after you pay your down payment and closing costs? 

Down Payment

•  How much money are you putting down?
 
•  Is this your own money? A gift? A nonprofit agency grant?
 
Loan Purpose

•  Is this mortgage for a home buy or refinance?
 
•  If it’s a refinance, do you want to take cash out at closing to pay off other debts? 
 
•  If so, how much?

Property Use

•  Do you plan to live in the house?
 
•  Is it investment property? 

Property Type

•  A condominium?
 
•  A duplex? 

In order to get the best possible interest rate and gain the trust of your lender, you will want to be able to prove that you’ve had steady employment (preferably with the same employer or in the same line of work) for two or more years. You also want to avoid making any major purchases before applying for a loan – if a lender sees that you’ve just purchased an automobile last week, your debt-to-income ratio goes up and your ability to pay down a home loan goes down.

It is preferable to be making a down payment of at least 5% of the sales price with your own money and to prove that you have at least two months’ worth of mortgage payments in the bank; however, there are many programs such as Fannie Mae that require much lower down payments.  

To learn more about investing in Huntsville AL real estate or for a referral to a reputable lender, please call me at 256-508-0211 or visit MoveToHuntsville.com. You may also sign up for automated emails of new listings at HuntsvilleHomeHunter.com.

By now we’ve all heard buzz about the supposed “credit crisis,” with tales of all Huntsville AL real estate buyers being required to put 20% to purchase a home and then still being unable to find a lender to give them a loan. It seems the press just can’t get enough of all the “misery” in the Huntsville AL real estate industry. But is this really what is happening?

We are right in the middle of what might be considered the biggest disservice ever perpetrated on potential home buyers. The fact is that mortgage money is as available today as it was a year ago and loans are being made - right now - with little or no money down. Who are these lenders, anyway? They’re right down the street, you just need to know where to look.

Federal Housing Administration (FHA) loans are making a huge impact on the mortgage industry; recent estimates show that about one out of five mortgages is an FHA loan. Although FHA loans never “went away,” their re-emergence is a result of the collapse of the sub-prime market. Technically, FHA doesn’t require a minimum credit score; in reality, however, lenders typically will not approve an FHA loan with a credit score below 500. That is still a far cry from the notion that an 800 score is the only thing lenders care about.