Real Estate 101: Do Refi's Make Sense?

There are many reasons homeowners refinance: to lock in a favorable interest rate, to lower their monthly payments, to withdraw equity they've built up in their home, or to pay off their mortgage more quickly. If you're thinking about refinancing, here are reasons to justify doing so:

• Lowering your interest rate by 2 points or more
• Lowering your monthly payment
• Changing an adjustable rate mortgage to a fixed mortgage
• You plan on living in the house 3+

Refinancing will include closing costs. Even mortgages that are advertised as having no-cost or low-cost closings have closing fees — they're just not called closing fees.

• Loan Origination Fee Discount Points
• Miscellaneous Lender Fees Appraisal Prepayment Penalty
• Title Company Fees
• Prepaids-Upfront payments of taxes and insurance

Use this simple formula to determine if a refinance is a good idea: Let’s say you have a $200,000 balance at 6.5% on a 30 year term. If you did a refi at 5.5% your new monthly payment would be about $130 lower. That is a savings of approximately $1,560 a year. If the total cost of the refi is $3,000, then it would pay for itself in just two years. If you intend to live in this house another 3+ years, the refi makes sense.

Refinancing isn't something you should enter into lightly; it can be time-consuming and expensive. But once you run the numbers, you may find the long-term savings will offset the costs related to refinancing. Then you can take the money you save each month from your reduced payments and put that to better use. To calculate how much money you would save with a lower interest rate, visit my website at http://www.joeywomblesellshomes.com/silver_mortgagecalc.asp.

Determining if Real Estate is Priced Correctly

Determining if Real Estate is Priced Right:
I am often asked by my clients, "How much under the listing price of real estate in North Texas should we offer?" While this is an excellent question, the answer is often difficult to pinpoint. The main reason I emphasize the education phase for homebuyers is because ultimately that is the best way for them to understand property values. When you review and study 40-60 (or more!) listings, then drive by 10-20 and look at 5-10, you will learn to immediately recognize the "Hot Listings" as well as recognize the ones that are “Not so Hot.”

Sellers price their homes using 4 basic strategies:

1. Ridiculously Overpriced
These sellers have listened to a real estate agent over-inflate the value of their home in an effort to obtain a listing. We call it "buying a listing." and it just sets both seller and agent up for a BIG disappointment. There is a natural tendency on the part of sellers to list with the real estate agent who promises them the highest sales price, sometimes overvaluing by 10-20%. These sellers may need a few months before they realize that their home is way overpriced as compared to others in the area. And the longer an overpriced home stays on the market, the more likely we can get the seller to face reality and sell at a lower price.

2. Slightly Overpriced
These sellers fall into 2 categories:
• Those that feel their home are worth every penny of their asking price.
• Those that want to leave a little "negotiating" room.
These homes, which can range between 4-10% overpriced, account for perhaps 75% of all homes for sale. Oftentimes, these sellers will reduce their price at the first sign of resistance on the market.

3. Fairly-Priced
These sellers have carefully and realistically studied other homes for sale, and they have priced their homes very competitively. These homes usually sell within 4 weeks at or very close to the listed price.

4. Attractively-Priced
These homes are deliberately priced below value, because the seller wants a fast sale. Even with many competing offers, these homes usually sell within 7-10 days, at or above the listed price.

To find out more what your home is worth,
please visit my website by clicking on the link below.

http://www.joeywomblesellshomes.com/homeeval.asp

The Current Real Estate Market

The question I am asked the most is "How is the real estate market?" The media has done a great job in convincing the public that real estate is in a bad way these days, but the truth might surprise you.

In a recent Merrill Lynch Economic Report, the prices of homes have not decreased, as some may believe. In fact, real estate prices have increased 60% since 2000. If you've owned your home since then and are worried about the return on your property, have no fear because even if prices do decrease when it's time to sell, you'll still be ahead. If you're thinking about purchasing a new home in the current market, keep in mind that real estate is one of the few investments you can make using leverage. This means you can put 10 to 20% down, yet your return is based on the full market value of your home.

In the past eight years, the S&P 500 report has only declared a 1% per year return, despite stocks doubling in the past five years. It's important to think long term when it comes to the value of your investment. Real estate investments have provided larger returns in the same amount of time.

Finally, considering the recent drops in interest rates, now is the time to buy and lock in a low fixed mortgage rate. It may be tempting to wait for the rates to drop more, but there is a chance you will miss out. Nobody can accurately and consistently predict the market. Investing now, while you know you have the upper hand, will provide you with a comfortable interest rate you'll be happy with. If you've owned your home for more than two years, you may want to consider refinancing. Especially if you have an adjustable rate mortgage, securing a low fixed interest rate can help ensure the stability of your financial future.

Don’t let the media scare you into waiting on your new home purchase. The North Texas real estate market is still strong and growing. If you would like more information on property in this area, please contact me at 972.900.2338. Or click on the link below.

http://www.joeywomblesellshomes.com/vip_buyer.asp

The FSBO Myth

Selling your home yourself sounds like a good idea.
FSBOs (For Sale by Owners) think they will save money, but do they?

The obvious reason a seller decides not to use a Realtor is in the hopes of saving a commission. It only makes sense, we all want to save money. But does it work?

• Does the seller know more about marketing than a full time professional Realtor?....No.
• Does the seller know about all the forms, disclosures, contracts?....No.
• Does the seller feel good about letting total strangers into his home unescorted?....No.

The reason sellers decide to market their own home is in the hope of saving a commission.

89% of all buyers use a real estate agent to purchase their new home. That means that only 11% of all buyers are looking at For Sale By Owners. Why are these particular buyers not using a real estate agent?

• Does the buyer know all the available properties in his area?....No.
• Does the buyer know how to negotiate the best deal?....No.
• Does the buyer know about the contracts, inspections, and mortgage issues?....No.

The reason buyers decide to buy a home without an agent is in the hope of saving a commission.

The bottom line is this, a FSBO hopes to save paying a commission. Well guess what, the 11% of all buyers who will consider a FSBO, they want to save that same money. That's why they are looking at FSBOs without the assistance of a Realtor. Homes listed by a real estate agent sell for an average of 3% less than the asking price. FSBOs sell for an average of 13% less than the asking price.Last year about 8% of all home sellers sold their homes without a real estate agent. That's down from 13% in 2006.

FSBOs were a bit older (a median age of 54 as compared to 48) and had significantly smaller incomes ($30,200 less) than those sellers who hired an agent. The median FSBO selling price of $132,800 fell well short of the $160,000 median price for agent-assisted sales.Time on the market is a critical issue.

FSBO properties take almost 30% longer to sell than those listed by a Realtor. Lawsuits are not uncommon when it comes to selling property. Most FSBOs know nothing of the proper forms, timetables, repair negotiations, importance of a good seller disclosure, closing procedures.

What about the issue of security? A FSBO must let any and all people who come along into their homes unescorted by a professional real estate agent.

Its not uncommon for FSBOs to enter into contracts with buyers who have not been qualified. This takes their homes off the market, only to be disappointed weeks later when the buyer is rejected by the lender.

7 out of 10 FSBOs eventually list their property with a Realtor. But only after 8-12 weeks of disappointment trying themselves.

Call a Realtor who has been in the business for many years, right here in the North Texas market and let them assist you in selling your home. You will make more money in less time with less hassle than by trying to sell it yourself.

For more information on selling your own home click on the following link: http://www.joeywomblesellshomes.com/silver_fsbo.asp

If you have other questions regarding the buying and selling of property, click on the link below: http://www.northtexasrealestatehotline.com/