Excellent question. So call a lender and ask. And if they give you an answer without asking you any questions, say thank you, hang up and call someone else.

Why? Because in today’s world there is no such thing as “today’s interest rate”.

There’s barely even “this morning’s interest rate” or “this quarter hour’s interest rate”.

Additionally, there isn’t one interest rate at any given time. There are many variables that determine which one of many rates you can get.

The reason?

Risk management. (Funny how the lenders have decided to actually manage risk instead of create it. But that’s a topic for another post…)

Unlike a couple of years ago when one merely needed to be an inhabitant of the Earth and the nerve to apply for a loan to get a mortgage, banks have returned to, shall we say, more circumspect guidelines.

So, your interest rate will be determined by*:

• FICO score
• how much you put down
• loan amount
• type of loan (conventional, FHA, VA)

And in addition to all these factors going in to determine the interest rate, they will also determine how many points, if any, you’ll need to pay to get that rate. [For a quick explanation of points, read this.]

For example, if you have a FICO score of 720, are putting down 5% and are borrowing $150K with a conventional loan, you might be quoted a rate of 5.625% with 1 point.

Same scenario except you have a FICO of 650 and your rate could be 5.875% with 2.5 points.

Same scenario except your getting an FHA loan and your rate could be 5.5% with 1 point.

Any of these numbers may work for your situation and a good lender can help you sort out whether it makes sense to pay the points, put down more, change to an FHA loan, or wait and work on your FICO score.

The bottom line is this: Don’t think that whatever rate you read or hear about at any given moment in ads will be relevent to your situation. And a lender who starts asking you for more details is not being a jerk but rather is doing the right thing. One who quotes you numbers without determining some key factors is not serving you well.

Ask your agent, your parents, your cube mate if they have a good lender to recommend. There’s a lot of mortgage money out there to be loaned. Buyers just need to meet a few more requirements.

And being an inhabitant of Earth is still a plus.

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If you have questions, comments or a good joke to share shoot me an email.  I’m a full time Realtor®, I love what I do and would be thrilled to hear from you.

* Mortgage lending practices can vary from region to region, lender to lender, and can be affected by market conditions. Lending criteria can change, and have. Often. The information I provide is based on my experience in my area. So, again, ASK QUESTIONS.

Tags: discount point, Elm Street Mortgage, FICO score, mortgage rates

[This is a snippet of information about mortgages and lending. I've written previously about some of these details but this weekly installment will be on one aspect of the nuts and bolts  - not to be confused with the "nuts and dolts" whose shaky lending decisions helped get us into this fine mess -  of the borrowing process. If you have a particular topic or question, send it along]*

What is an “Origination Fee”?

In the simplest terms, this is money paid to get a lower interest rate. Some regions customarily quote this fee, some don’t.

An origination fee is essentially a loan discount – or ‘buy down’ – point and equals 1% of the amount borrowed (not of the purchase of the house). You can also pay a fraction of a point, but 1% is typical.

You don’t have to pay the fee, but you will probably pay a higher interest rate if you don’t. You’ll want to figure the up front cost of the point against the increased monthly payment of a higher interest rate.

If  you’re going to be in your house more than about three years, it probably makes sense to pay the point.

If cash up front is an issue for you, going with the higher interest rate may make more sense.

If you can get the seller to pay your closing costs (not an uncommon occurrence) you can get the best of both worlds by agreeing to the point and getting the lower rate.

How are you to know what your closing costs and monthly payments will be so that you can make an informed decision? Ask for a “Good Faith Estimate“. More about that and other mortgage terms in future posts.

For now, take away from that:

• an origination fee is charged to get to “buy down” the interest rate
• a customary charge is 1% of the borrowed amount, but can vary
• whether ’tis wiser to pay the fee or not depends on your current needs and future plans.

And don’t feel like a goof if you don’t know all this already. Why on earth should you? Ask your lender. Ask your real estate agent. Ask you cousin who just went through all this. Never be afraid to ask.

_______________________________________________________________

If you have questions, comments or a good joke to share shoot me an email.  I’m a full time Realtor®, I love what I do and would be thrilled to hear from you.

* Mortgage lending practices can vary from region to region, lender to lender, and can be affected by market conditions. Lending criteria can change, and have. Often. The information I provide is based on my experience in my area. So, again, ASK QUESTIONS.

Tags: mortgage terms, Origination Fee

Back in the day, Realtors® were the holders of the real estate gold. That is, the data about houses that were listed for sale: price, number of bedrooms, etc., If you wanted to get the dish on that house you just drove past on your way to work you needed to call the listing company or another Realtor® and ask.

That agent would look into the magical database, otherwise known as the Multiple Listing Service (MLS) where would be found in a glance the listing price, tax value, dimensions of the kitchen, which elementary school district the property is in and on and on.

Ah, those were the days.

These days, if a property catches your eye or if you want to find out what houses meet your criteria, the public has access to much of the same data as agents. There’s the grandmother of all real estate search sites, Realtor.com, as well as FrontDoor.com, listingbook.com, Zillow, not to mention the innumerable individual agent and company websites that have “search for listings” links in them (including this one).

In a future post I’ll examine the differing search results for these sites. They are most definitely not all on the same page. No pun intended.

So, who needs an agent? All they are good for is data and anyone can get that now. Right?

Honestly, that is all some agents are good for. Let’s face it, some real estate agents have not needed to be anything more than present over the past 5 years or so to make a living selling real estate.

But real estate doesn’t have the market cornered on members who don’t bring much to the table. There are doctors who can’t seem to relate to sick people (an odd career choice on their part), lawyers who offer no advise but merely carry out your suggestions and politicians who… Well, let’s not go there.

Getting past the ‘place holder’ agents who will undoubtedly need to find another line of work as the real estate market continues its interesting adjustments, there are good agent who offer qualities which have nothing to do with providing info on when a house was built, how many square feet there are and whether there’s gas heat or not.

They bring perspective, guidance, suggestions. They point out when your money will buy more house in the next neighborhood or when you’re about to get ripped off by your lender or whether the attorney your cousin suggested may be great for getting you out of a speeding ticket but may not be a good choice to handle a title search and decipher instructions from the mortgage lenders package.

Frankly, finding a house is not a great challenge. Particularly not these days. They’re’ EVERYWHERE!

But there is angst and fear associated with buying a house. There should be. It’s a big deal. A very big deal.

You don’t want to be in it alone.

Let’s say you find a house that interests you via one of the aforementioned resources. For the most part, if the property shows up on the online site, it has gotten there through a feed from a Multiple Listing Service.

That means, a real estate agent has listed it.

That means the seller has an real estate agent representing them.

Shouldn’t you?

So, bypassing an agent in searching for a house (BTW, working with a buyer’s agent doesn’t cost anything*) will not mean you bypass all agents. You just end up talking to someone who represents a seller.

Are Realtors® obsolete? Some are. Some started out that way.

But there are many, many honest, dedicated and enthusiastic agents who will help you through the process. And in buying a house, it’s the process that’s important.

* This holds true for most standards of practice. There may be some markets where buyers agents attempt to charge fees. That has not been the practice in the Greensboro area.

Tags: buyer's agent, finding a house, FrontDoor.com, listingbook.com, MLS, Multiple Listing Service, Realtor.com, Realtors role, sellers agents, Zillow.com

As promised in my previous post, here is a breakdown of the listings in Greensboro, NC by property type. To be clear, for these purposes, I’ve collapsed cluster homes and modular – not to be confused with manufactured  (or ‘mobile’) homes – into the Single-Family category.

One might predict, and one would be correct, that there are far more single-family houses for sale in Greensboro than either townhouses or condominiums. Or even as these two categories combined. We’re just a ‘suburby’ type of city.

Of the houses on the market -’actives’ and ‘pendings’ combined – the  numbers fall out thus:

• Single-Family – 2111 (72%)
• Townhouse – 448 (15%)
• Condominium  – 391 (15%)

And for the graphical fix:

Greensboro Actives & Pendings by Property Types*

* Data per info from Triad MLS (Multiple Listing Service). At least, my download, copy, paste, sort and subtotaling of it.

Tags: condomiums in Greensboro, Greensboro housing statistics, Greensboro real estate, Greensboro real estate market, Greensboro townhouses, Multiple Listing Service, Triad MLS

A recent New York Times article makes that case for this being a good time for 1st-time home buyers to get in the game. I couldn’t have written it better myself – and actually have written it before.

The writer points out the upside of the downturn, namely:

• prices are low
• prices won’t always remain low
• 1st time buyers don’t have a house to sell in order to buy
• there are programs to benefit 1st time buyers

All good stuff. And true. And I’ll add again that we all have to pay to live somewhere (unless you’re claiming squatter’s rights in your parents’ basement) and you might as well be paying your mortgage rather than the mortgage held by your landlord.

But then there are the comments made by readers of the article.

Wow. It seems to me that many of them missed the point. And some thought the article was irresponsible.

True that no one knows what the immediate future brings. We never have. We do know that just as there are always cyclical peaks for any economic metric, there are valleys. We also know that what is true for some parts of the country are not true for all. The reality for California and Florida is not the reality for North Carolina.

As for the notion that it would be foolish to buy a home unless you are certain the value will increase immediately – even if that increase is modest – is short sighted.

Year after year, generation after generation has willingly and happily purchased cars that are guaranteed to IMMEDIATELY begin to lose value. Before the first payment has been made, the thing is worth less than when you were handed the keys.

Yet 1st time home buyers should not take advantage of low interest rates, plentiful inventory and lowered prices until those prices begin to go UP? This makes sense?

It does not.

I don’t advocate for everyone owning a home. Not all people are cut out to be married. Some should never be parents. Many shouldn’t have a pet. And some folks are simply not cut out for the responsibility of owning and maintaining a home.

But many are and want to. If you are one of these people and you have the means and the inclination, don’t let others scare you out of it. (There are those who thought Xeroxing would never catch on because we had all that carbon paper that worked just fine.)

Talk to your peers, friends who have bought, a good lender. Be sensible.

Just remember that sensible does not = scared.

So, is this a good time to buy a house? Yes.

Is this a good time to wait? Yes.

Ask questions, find out your options. Follow your instincts and your heart.

Tags: $7500 tax credit, 1st time buyer, Greensboro, New York Times article, time to buy house

There is so much data available these days about housing on the market, it can be overwhelming. Let’s drill it down a bit.

Having examined the foreclosure activity in Guilford County I wanted to show the non-foreclosure listing figures. We’ll look at the the various cities and towns in Guilford County and will break down listings by property type :

Communities:

• Greensboro (largest city and county seat)
• High Point (2nd largest and home of the International Home Furnishings Market)
• Summerfield
• Jamestown
• Oak Ridge
• McLeansville
• Stokesdale
• Brown Summit (also written and Browns Summit)
• Whitsett

Property Types:

• single-family homes
• townhouses
• condominiums

So much to see! Off we go…

As of today, the total number of non-foreclosure listings in Guilford County is 3940. Most are in Greensboro (2295) followed by High Point (786). The rest of the numbers shake out like this*(Click on the pie wedge to see the number of listings):

Breaking down the numbers for the types of properties on the market in Guilford County it looks like this:

• single-family (3051)
• townhouse (526)
• condominium (363)

* Data is compiled from my reporting from the Triad Multiple Listing Service (MLS).

Tags: Greensboro condos, Greensboro housing statistics, Greensboro real estate, Greensboro townhouses, Guilford County real estate, High Point, International Home Furnishings Market, Multiple Listing Service, Summerfield, Triad MLS

My previous post referenced the interest rates that were available a couple of days ago. The point of the post was to communicate that there is mortgage money available to be loaned.

In that post was hidden in plain sight the fact that interest rates do not come in a ‘one size fits all’ package. So, if a lender gives you a straight up quote without asking things like how much the purchase price of house is or how much your planning on putting down or what your FICO score is, thank them and move on to another lender. And if you are asked these questions, please don’t feel like you’re being played somehow.These are variables that absolutely impact the answer as to what an interest rate will be.

On top of all that, remember that interest rates can change frequently. They’ve dropped about .5 point in the last week.

Why all the probing when all you want is an answer to what you’ll pay for an interest rate on a mortgage?

Much of it is a result of the turmoil in the credit markets recently. Lending is all about leveraging risk. As stated in the previous post, lenders need to lend money. It’s their raison d’être. But good lenders need to look at many factors to determine the likelihood of being paid back and therefore cut a break to those presenting less risk and charge a bit more to higher risk borrowers.

[Much of this reasonable circumspection was thrown out the window over the last few years, thereby creating the calamity before us, but that is a topic for another day...and a bottle of wine.]

Now, back to those variables.

Something that is a new practice, and it looks like this just started a week or so ago, according to my trusted source for all things mortgage related, is lenders actually charging a higher interest rate for those putting down 20% than those putting down 5%.

“Wha???” you might exclaim. And you’d be justified. That just seems weird. Why should a borrower who’s willing to have skin in the game to the tune of 20% of purchase price be charged more than one putting down 5%?

The reason is that, as has always been the case, if one puts down at least 20% on a mortgage, no PMI (Private Mortgage Insurance) is required. Anything less and the borrower does have to pay for PMI, thus insuring the lender in case of borrower defaults and stops paying on the loan. The reasoning was that if someone has committed 20% of their own money, that was ‘insurance’ enough that they would move heaven and earth to avoid defaulting and risk losing their home.

That was B.C. (Before Calamity). Lenders now fear that the same 20% commitment will not protect against default, and since the loan isn’t covered by PMI, they have greater risk.

My personal feeling is that this will not last. But it may.

So, should one keep their down payment money in their pocket and get the lower rate? You need to put pencil to paper and get all the data to make that decision. The lower rate may be countered by the PMI premium. And that premium is not buying you any actual equity in the house.

Ask a good lender, get the facts. The truth shall set you free.

Tags: credit crunch, down payment requirements, FICO definition, interest rate drop, mortgage rates, PMI definition

You may have, just maybe, heard a news story or two (thousand) about the economy. In broadcast journalism, the practice of coining a few catchy phrases and repeating them ad nauseum, has become the rule of the day. You know what I mean. One begins to wonder if certain words can be uttered without certain others. Try to say “downpour” without saying “torrential”, or “controversy” without “firestorm of”. Or “credit” without “meltdown”.

Go ahead. Just try.

But the thing is, there can be downpours that aren’t torrential and not all credit is in meltdown.

There is mortgage money to be loaned. And the lenders want to make you these loans. They don’t make money unless they loan money. (Commercial credit, now that’s another creature and is not to what I refer here.)

The catch is that you have to have a job, a decent FICO score and some money to put down, none of which is unreasonable if you want to borrow money. And it’s the way it always was up until things got wacky in the lending world, what with the “no doc” loans, borrowers with FICO scores lower than their bowling scores and 0% down.

But things are mostly back to normal in regards to lending requirements. And rates are great. My friend and colleague, Christie Caldwell, sent out these rates a couple of hours ago.

Assuming a purchase price of $250,000 rates looked something like this, using the FICO/LTV/Interest Rate model:

• 680/95%/5.50%
• 680/90%/5.50%
• 680/80%/6.00%

• 700/95%/5.50%
• 700/90%/5.50%
• 700/80%/5.875%

• 720/95%/5.375%
• 720/90%/5.375%
• 720/80%/5.50%

• 740/95%/5.375%
• 740/90%/5.375%
• 740/80%/5.50%

If your FICO is below 680, you can still get a loan, but you’ll be looking at paying more for ‘points’. And a gold star to the first one to see where things may seem a bit odd in this. [HINT: put down more, pay higher rate?]

Keep in mind that rates can change frequently. As in, several times a day. But these are good guidelines for where things are in general. Also, a borrower’s rate will be impacted by the amount financed, debt/income ratio, etc.,

Again, these numbers are a guide for today. Around noon. Before I go get another cup of coffee.

Just know that the torrential downpour of news items covering the firestorm of controversy about the credit meltdown may be missing some of the facts regarding mortgages.

Tags: Christie Caldwell, down payment requirements, Elm Street Mortgage, FICO score, Greensboro mortgage lender, Greensboro real estate, interest rates, LTV, mortgage rates, qualify for mortgage

It would be easy to believe that no one is buying houses, what with all the horrendous scary disgusting sober news out there. I don’t know what its like in other markets, but the fact is that according to my decidedly unscientific pull of data from the Triad Multiple Listing Service (the database into which all transactions involving Realtors in our area entered) shows that between April 1 – September 30 of this year, nearly 2000 properties closed, just in my city of Greensboro, NC. (Our MLS reaches across the Piedmont Triad area of North Carolina which includes several counties and cities.)

Now, for sure that number is lower than for the same time frame of last year – just over 2500 properties – buy there are still people buying homes. And they are getting some good deals. It’s a good time to buy.

Are there down sides to buying now?

That depends, as it always has, on your particular situation. If you have stable income, have a good credit record and won’t be looking to move in under about 2 or three years then it’s a good idea to start looking. This is a historic “buyer’s market” and it won’t always be such.

If you are having trouble paying your car loan, don’t have any savings or wonder every day whether your job will be there when you walk in, then perhaps you need to sit things out until things settle down for you.

But this is not new. These are basic questions a buyer should always ask themselves before getting into home ownership.

So, check your credit (go to this site to get started), check out your bank balance and put some money by for a downpayemnt, and call a Realtor to start looking.

Go on! You don’t have anything to lose. And you may find your next home, just waiting for you.

Tags: Greensboro, Greensboro Realtors, Real estate market, real estate statistics

So you’re doing the right thing, getting your financing in order so that you can take advantage of this historical buyer’s market, and your lender has told you how much of a loan you can afford, what your monthly payments will be and what your costs on the day of closing will be. Good for you.

What, though, are all these line items on the “Good Faith Estimate”. Of course, your lender will be able to explain all of them. But perhaps you want to verify wheat you’ve been told. Or you just need a bit more explanation. Maybe you’re just shy about asking. (So many of us feel we should be knowledgeable about everything and it’s just not possible. NEVER refrain from asking questions. A professional, conscientious lender, agent, attorney, inspector will welcome being able to answer you.)

All that having been said, what are those danged charges? Follows is a partial list of some of the charges you may find when you buy a house. These are the costs that are generally considered charged to arrange the loan itself. There are other costs regarding taxes, insurance, revenue stamps and attorney fees that will be addressed in subsequent posts.

[NOTE: Legitimate charges can vary by region, the type of loan and the lender. When in doubt the reason for a cost, ask]

Origination Fee: The lender charges this to cover the cost associated with setting up the mortgage. Often it will be expressed as “1 point, ½ point, 1.5 point, etc.,”. A point equals 1% of the amount financed.

Loan Discount Fee: This is a charge paid if you decide to may extra for a reduced interest rate. Doing so is not always a good idea as you need to weigh whether the cost of the discount fee (again, usually expressed in terms of ‘points’) is made up by the reduction in monthly payments. Ask your lender to calculate the savings and how long you’d need to stay in the house for the discount fee is ‘paid for’.)

Appraisal Fee: The appraisal is required by the lender to ensure the property is worth what is being loaned. This is one fee the lender will generally require in advance.

Credit Report: The lender requires this in order to make sure YOU are worth what they’re lending. It will show your payment history, total outstanding loans, open lines of credit, etc., this lender will also probably require this up front at the start of the application process.

Application Fee: Strictly a fee charged by a lender and will vary widely depending on the lender. Some lenders don’t charge on at all.

Commitment Fee: Another lender fee. Varies greatly lender to lender.

Document Fee: See previous two items.

Flood Certification Fee:  Covers cost to evaluate whether property is in a flood plain and whether flood insurance will be required.

Tags: Greensboro real estate, loan discount point, loan origination fee, mortgage terms, real estate terms