The Real Estate Transaction Process

Surround yourself with a team of qualified real estate professionals.

A team of qualified real estate professionals will be a very valuable asset to your real estate transaction. Whether you are a first time home buyer or a seasoned investor, having a solid team is imperative. You want someone that will be able to recognize good deals and someone who understands the home buying process.

Get Pre-approved!

A good mortgage banker can be the difference between getting a deal done or not. You want to work with someone that has vast knowledge of current market conditions, that way you can get the best rate for the best price.

Select a property.

Once you have spoken to the mortgage banker you will have a better idea of how much you qualify for. It is important to be realistic. You do not want to set your expectations on a million dollar home if you qualify for a $100,000 home.

Submit an offer.

Now that you have found your new home it is time to submit an offer. You will want to review the market data with your Realtor to determine how much you will offer. A good realtor will be able to set realistic expectations for you and advise you on how to negotiate the offer based on what type of market your new home is in. Remember that you make your money when you purchase however, the market dictates the price of the home.

Accepted Contract to Close

When you come to “terms” on an offer it now becomes a contract. The contract is executed on the date that the last initials are put on it. The executed date is the date for everything to start. Per the contract, you are required to get the earnest money receipted with the title company in two business days. If you have a termination/option period you also have two days from the executed date (this is very important because if you do not get the option fee to the seller this paragraph is stricken from the contract and you lose your UNRESTRICTED RIGHT TO TERMINATE). During the option I always recommend that you have the home inspected by third party inspector. Your agent will be able to refer you to some qualified home inspectors. After you receive the inspection another round of negotiations takes place can take place (if there are repairs that need to be done).

Closing and Funding

After working with your lender to meet all the conditions and criteria to get the loan, it is time to close. The lender will send instructions to the title company to set up the HUD. Your Realtor and lender will go over the HUD with you to make sure that all the numbers are correct. After the lender approves the HUD it is time to go sign the documents and fund the transaction. The sellers agent will have the keys at the title company and when it funds you will be able to get your keys.

Number Of Austin Homes Sold Declines While Prices Rise

ZipRealty is reporting this week that both the selling and asking prices for homes in the Austin Real Estate market have risen 17 percent over August of last year. This while actual sales of new and existing homes have actually dropped 19 percent compared with the same period last year.

Average selling prices on homes in Travis County increased from $282,869 to $331,200 over last year at this time reported Zip, a nationwide brokerage firm. But while sellers were pulling in over 95% of their asking price, total sales skidded to an average of $316,621, nearly 20% off their previous year mark and spent an average of 70 days on the market before selling, an increase of 3%.

[Read more…]

Historically low interest rates present a great opportunity to purchase real estate in Austin, TX.

Here is a great article I found on CNBC.Com.  Mortgage rates are at an all time low and with supply up and demand down I think there is no better time to purchase a home or investment property in the Austin area. 

I will be refinancing one of my Investment properties into a 15 year note with a 3.875 interest rate.  My payment will only go up $140.00 a month and with the current rental rate the property will go from cash flow positive to cash flow neutral but I will cut out 12 years of payments.  That is an absolute no brain-er.  If you are interested in a situation like this please feel free to contact me.  I can refer you to the best in the industry.

interest rates

U.S. mortgage rates dropped in the past week, with 30-year fixed-rate loans tumbling to their lowest level in 39 years, according to a survey released on Thursday by Freddie Mac, the second-largest U.S. mortgage finance company.


Interest rates on 15-year fixed-rate and hybrid adjustable-rate mortgages dropped to fresh lows as well. While low rates and high affordability helped the housing market gain ground over the past year,  the sector has struggled since popular home buyer tax credits expired on April 30.

Interest rates on U.S. 30-year fixed-rate mortgages, the most widely used loan, averaged 4.69 percent for the week ended June 24, the lowest since Freddie Mac [FRE  0.47    -0.02  (-4.08%)   ] started the survey in April 1971. The latest rate is down from the previous week’s 4.75 percent and the year-ago level of 5.42 percent, according to the survey.

Freddie Mac said the 15-year fixed-rate mortgage averaged 4.13 percent, down from 4.20 percent last week and the lowest since Freddie Mac started tracking the mortgage type in September 1991.

Eligibility for home buyer tax credits required buyers to sign purchase contracts by April 30, with sales required to close by June 30. There is currently a push in Congress to extend the contract settlement to Sept. 30.

Mortgage rates are linked to yeilds on Treasuries  and yields on mortgage-backed securities.

Low Rates, Muted Demand

Leif Thomsen, CEO of Mortgage Master in Walpole, Massachusetts, said he has seen a noticeable drop in demand for home loans in recent weeks.

“We will probably see a slow-to-OK summer for home purchase loan demand,” he said. “The direction of interest rates will dictate overall volume.”

The Mortgage Bankers Association said Wednesday that applications fell from a six-month peak last week as low interest rates failed to foster demand for refinancing or home purchase loans.

One-year adjustable-rate mortgages (ARMs) were 3.77 percent, down from 3.82 percent last week and the lowest since the week ended May 6, 2004.

The rate on the 5/1 ARM, set at a fixed rate for five years and adjustable each following year, was 3.84 percent, down from 3.89 percent last week, and the lowest since Freddie Mac started tracking the mortgage type in January 2005.

A year ago, 15-year mortgages averaged 4.87 percent, the one-year ARM was 4.93 percent and the 5/1 ARM was 4.99 percent.

USDA Loans Could Lose Funding

USDA Loans | Paul Smith Austin Real EstateHere is an article from a good friend of mine, John McClellan. He’s a Mortgage Banker in Austin and host of a real estate talk show on KLBJ. John discusses how USDA loans could lose their funding in April of this year. This loan product is a zero-down loan that is typically used for homes under $180k, in rural areas. The loan program has income limitations that keep it in the first time home buyer category. The first time home buyer category has been one of the only bright spots in the Austin Metro. Some neighborhoods have less than two months supply. This category has been artificially propped up by the governments $8,000.00 first time home buyer tax credit and historically low interest rates. Both of those factors will be pulled out from under the feet of the market like a rug. On top of that is the potential dry up of the UDSA funds and there will definitely be a negative impact on your market, especially in the rural areas that have been relying on this loan product.

I understand that the government can’t keep propping up the national real estate like a kickstand on cheap bike, but the USDA program has been around for a long time and has a purpose. It was not utilized in the past because there were other zero-down programs available. Now that this is the only game in town I hope the government funds it for the rest of the year.

-Paul Smith

USDA In Jeopardy!

It has recently been announced that the USDA loan program will be out of money by the end of April 2010. In any typical year the USDA loan program has plenty of funds to make loans through the end of the year. Over the last few years as other “0? down loan programs have disappeared, USDA has stepped up to fill the void and provide affordable “0? down loans for first time homebuyers across the nation. This increased demand for USDA loans has led to a shortfall the last two years in funds needed to keep this program solvent. Last year the stimulus money was used to bridge the funding gap and business went along as usual. This year however there is no stimulus money left to bridge the funding gap and it looks like that sometime in April we will be out of funds and USDA will stop issuing commitments until their normal refunding takes place (sometime in the late fall).

This will hasten the slowdown that I have predicted will happen after the June 30th deadline for the FTHB credit and as I have said remove the last “0? Down, affordable mortgage program available in today’s market. If the government is truly trying to increase the availability of affordable alternatives when financing a home then they need to refund the program immediately. Think of all the homeowners who had planned to use the USDA program over the next couple of months to help them qualify for the FTHB tax credit, those borrowers are now left with no viable option.

I have included a list below of the members of the ”United States Senate Committee on Appropriations, Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies”. Try and say that without taking a breath or try putting it on a business card.

Democratic Members

Republican Members

Call your local Senator or email then to let them know the importance of this funding….

John McClellan – Supreme Lending