Heath Real Estate Market Trends – Texas

Must-knows about mortgage rate/fee combos - January 15th, 2012 10:37am
Don't assume loan officer has your best interest in mind

By Jack Guttentag
Inman News®

Share ThisEditor's note: This is the second of a two-part series.

Last week I discussed a new integrated calculator on my website that uses current and personalized mortgage price data to help borrowers select the type of mortgage that would minimize their net costs. This article introduces a second integrated calculator that helps borrowers select the best combination of interest rate and lender fees on their preferred type of mortgage.

Before describing this new approach, it is instructive to consider how the rate/fee combination is selected now.

Lowest rate used to solicit naive borrowers

Naive borrowers know that mortgages carry an interest rate, but they don't know that the rate varies with the amount of total upfront fees. They are thus vulnerable to solicitation from lenders and lead generation Internet sites promising the lowest rate.

While the lowest rate carries the highest fees, the fees are not disclosed. The annual percentage rate (APR) must be disclosed, and will be much higher than the lowest rate, but because these borrowers usually don't know what the APR is, they often ignore it.

Borrowers who respond to the solicitation and start the process will soon be confronted with the bad news about the fees required. At that point they may flee, or they may allow themselves to be sold another rate/fee combination by the loan originator (LO) -- a loan officer or mortgage broker.

Loan originators look for an acceptable combination

Most LOs try to guide the borrower toward a rate/fee combination that is responsive to the borrower's major weakness. If the borrower is cash-short, the LO will steer the deal toward a higher rate which may carry a cash rebate from the lender, for example.

If the borrower's problem is income adequacy, the LO will propose a lower rate that carries a lower monthly payment. The combination selected must meet underwriting requirements and be acceptable to the borrower.

What LOs seldom consider are the implications for the borrower's future wealth, which depend on the total cost of the combination selected over the period the borrower has the mortgage. Information on future costs has never been available before.

The integrated rate/fee calculator

In last week's article, I used the integrated type of mortgage calculator to compare a 30-year fixed-rate mortgage (FRM) and a 5/1 adjustable-rate mortgage (ARM) on which the initial rate held for five years and was adjusted annually thereafter.

In step two of the decision process, I assume the borrower selected the 5/1 ARM, and now must select the combination of interest rate and total upfront fees on this ARM from those available. The table below shows the available combinations and the total cost of each combination over different periods selected by the user.

Interest Rate/Fee Combinations on 5/1 ARM of $270,000
Dec. 8, 2011

Interest Rate
Points and Other Fees Paid in Cash Upfront
Initial Monthly Payment
Total Net Cost Over Assumed Life of Loan

3 Years
5 Years
8 Years

1.75%
$11,819
$965
$20,537
$28,459
$47,698*

1.875%
$10,780
$981
$20,469
$28,848
$48,118

2.00%
$9,743
$998
$20,403
$29,241
$48,544

2.125%
$8,714
$1,015
$20,345
$29,645
$48,980

2.25%
$5,392
$1,032
$18,517
$28,226*
$47,510*

2.375%
$4,423
$1,049
$18,507
$28,683*
$48,001

2.50%
$3,724
$1,067
$18,711
$29,361
$48,724

2.625%
$3,133
$1,084
$19,000
$30,129
$49,541

2.75%
$1,976
$1,102
$18,821
$30,416
$49,855

2.875%
-$11
$1,120
$17,672*
$29,705
$49,125

3.00%
-$465
$1,138
$17,953*
$30,470
$49,938

3.125%
-$704
$1,157
$18,459
$31,469
$50,995

3.25%
-$724
$1,175
$19,196
$32,707
$52,303


*Denotes the two lowest-cost combinations. The components of total cost are shown in last week's article.

Using the calculator

The best way to use the integrated calculator depends on the borrower's major concern. Borrowers who can deal with the highest monthly payment and the largest upfront fees shown in the table should select the rate/fee combination with the lowest total cost over the period they expect to have the mortgage.

As that period lengthens, the advantage shifts toward lower rates and larger fees, because the benefit of the lower rate extends over a longer period. I have flagged that tendency by placing asterisks next to the two lowest-cost combinations for each period.

If the borrower's major concern is cash, he excludes the top part of the table and looks for the lowest cost from the rate/fee combinations that remain. If the borrower's major concern is the initial payment, he excludes the bottom part of the table, selecting from the combinations that remain.

Some borrowers may want to impose both a cash and a payment limit. For example, the borrower represented in the table might want to cap cash outlays at $9,000 and monthly payment at $1,100. In that case, there are only five rate/fee combinations from which to choose. But that is four more options than he is likely to have without the calculator.

The writer is professor of finance emeritus at the Wharton School of the University of Pennsylvania. Comments and questions can be left at www.mtgprofessor.com.

... [ + Read Full Article ]

Home Maintenance Tips - December 27th, 2011 10:26am
5 tips to stay on top of home maintenance
Where to find reliable contractors
By Dian Hymer
Inman News®

You're not alone if your roof is leaking and you're kicking yourself for not having called a roofer during the summer months. Most people have a limited concept of preventative maintenance. This can lead to big problems that end up being more expensive than if you had routine maintenance in place.

Many buyers don't understand that home maintenance goes with homeownership. When you rent, someone else usually pays for repairs. As a homeowner, you're responsible for keeping your home in good condition.

Unless you're handy at home repairs, it can be costly to maintain a home properly. But there is a benefit at the end of the line. Buyers pay more for homes that are well-maintained and show a pride of ownership.

It can be a hassle to properly maintain your home unless you organize and prioritize the projects that need to be done. You also need to set a schedule and stick to it.

Most home maintenance can be done annually: roof maintenance (including gutters and downspouts); sealing exterior cracks; weatherproofing; a furnace and air conditioning inspection; and inspecting and cleaning the drainage system.

Mark these events on your calendar so that they can be scheduled for about a month before you'd like to have the work done. If you wait until just before the rainy season to start your annual maintenance, you could have trouble finding good contractors to help you.

Don't wait until your roof is leaking to repair or replace it. There will be collateral damage to the interior of the house. Your homeowners insurance company might pay to repair the interior damage, less the amount of your deductible, but it won't pay to replace the roof. Too many claims could be grounds for not renewing your policy.

HOUSE HUNTING TIP: Assemble a crew of contractors and tradespeople who can help you with your home maintenance. It's not always easy to find reliable people who do good work. You'll end up frustrated and having to do more oversight if you work with people who don't show up or do the job right.

Ask your real estate agent or acquaintances who own homes in the area to recommend tradespeople to you. If the seller is happy with people who have worked on the property, ask for a list of names and contact information when you close the sale.

Homeowners who haven't the time or expertise to determine what needs to be done to keep their home in good shape could ask the home inspector that inspected the house for them to do a reinspection periodically to point out areas that need attention.

One of the keys to good home maintenance is to take care of critical items as soon as they become apparent. For instance, don't postpone repairing a plumbing pipe leak. Have it repaired as soon as you notice it.

Don't assume that because your house is new that you won't have any maintenance issues. If the gutters back up on any house, even a new house, water can leak into the house or down the inside of the walls. This, left unchecked, can lead to a major repair to the framing. If repaired right away, you may just need to seal and touch up the paint.

Likewise, even though you just had the exterior painted, you still may have areas that will need touch up every year or so, especially if they receive intense sun exposure.

THE CLOSING: Don't go for the cheapest contractor or building materials just to save money. If an inferior-quality job has to be redone sooner than anticipated, your savings will dwindle.

Dian Hymer, a real estate broker with more than 30 years' experience, is a nationally syndicated real estate columnist and author of "House Hunting: The Take-Along Workbook for Home Buyers" and "Starting Out, The Complete Home Buyer's Guide."

... [ + Read Full Article ]

News for Heath, TX - December 21st, 2011 11:41am
Water IQ — Tips for Keeping Your Lawn Alive During the Drought
Public Notice

--------------------------------------------------------------------------------
Posted:11/01/2011

--------------------------------------------------------------------------------

On November 1, all customers of the North Texas Municipal Water District (NTMWD) will be under Stage 3 water management strategies as a result of the 28 percent loss of Lake Texoma water supply due to the invasive species, zebra mussel and ongoing drought conditions. Stage 3 water management strategies include a mandatory reduction in outdoor watering to once every two weeks between November 1 and March 31. All businesses and residents should check with their city water department for specific city restrictions.

Extending our currently available water supply and using water efficiently is critical as Texas continues to experience one of its worst droughts in decades. However, there are several steps residents and businesses can take to help maintain a healthy landscape during this time of diminished water supplies.

What Can I Do?
Below are some tips to help maintain your landscape while minimizing your outdoor water use during the period of Stage 3 water management strategies.

Wait until the drought has passed to install any new landscaping. New plantings, even native and drought-tolerant species, require a significant amount of water to effectively establish a root structure in their new location. Delay any plans for new landscaping until after the drought has passed.
Apply water directly to the roots. Soaker hoses and drip irrigation systems apply water directly to the root system, where plants need it most. This helps reduce the amount of water that is lost through evaporation, and it can also help save money on your water bill.
Limit fertilizer use. This will help reduce the amount of nitrogen in your lawn. Nitrogen encourages new growth in turfgrass, and new growth requires more water to maintain.
Eliminate runoff. If water is beginning to puddle on your lawn or flow into the street, stop irrigating to allow time for your lawn to absorb the excess water. You may have to adjust your sprinkler heads or set your irrigation system to cycle on and off to ensure that your lawn uses every drop of water efficiently.
Check your sprinkler system. Inspect the main control unit, rain/freeze sensors and sprinkler heads to update your watering settings, eliminate leaks and fix any misdirected or broken sprinkler heads.
Let your lawn go dormant. Most turfgrass species naturally go dormant in the winter and require significantly less water to stay alive. Reducing or eliminating the amount of water you apply to your lawn will signal to the grass that it is time to go dormant.
For more information, please see Keeping Your Lawn Alive During Drought by Texas AgriLife Research and Extension.

Agronomist's Corner
The Agronomist's Corner answers commonly asked questions about maintaining a healthy lawn in North Texas.

Q: Which types of grass can go dormant during a drought?
A: Most warm-season turfgrass species should be able to survive periods of drought without irrigation. When these grasses are under severe drought stress, they may go dormant but not die. Dormant grass will turn brown and may appear dead. Once watering or rain begins again, however, the grass will typically recover. Grasses that can go dormant are buffalograss, Zoysia japonica and bermudagrass. Other grass varieties are not as drought-tolerant, and they may die if they are deprived of water for an extended time.

Agronomist Corner Source: Texas AgriLife Extension Service


... [ + Read Full Article ]

Energy Savings for Winter - November 22nd, 2011 11:49am
9 ways to keep lid on energy bills
Air leaks can infiltrate surprising places
By Paul Bianchina
Inman News™

No one likes wasting money, especially in these tough economic times. So it certainly makes sense -- dollars and cents -- to make a small investment of time and supplies to close up those heat-wasting air leaks around your home. It'll pay back big dividends in reduced energy bills and a warmer, more comfortable house this winter. So let's look at some of the areas where those drafts may be lurking, and see how to take care of them.

1. Doors and windows: This should be an obvious one. If you can see gaps between your siding and your windows or exterior doors, close them up with a bead of clear or paintable acrylic latex caulk. Larger gaps can be filled with foam backer rod before applying the caulking.

2. Exterior penetrations: Some of these areas are going to be obvious, while some may take a little bit of searching. Some examples of exterior penetrations where air can leak into the house include exterior faucets, dryer vents, exterior electrical outlets, exterior light fixtures, holes that have been drilled for phone and TV cables, conduit penetrations, exit points for plumbing drains, and penetrations for air conditioning lines. Closing these penetrations may require a variety of different techniques, including caulk, expanding spray foam, or, in the case of electrical boxes and fixtures, specific gaskets that are designed to fit the boxes.

3. Exhaust-vent covers: Dryer vents, range hood vents, bath fan vents, and other interior ventilation equipment typically terminate outside the house in a plastic or metal cover that has one or more louvers on it. The louvers are designed to be in the closed position whenever the fan is not in use, so that outside air doesn't leak in. Check all of these louvers to be sure they're closing completely, with no air leaks. If they aren't, you can adjust the spring tension to hold them closed more tightly; add foam weatherstripping tape for a more air-tight seal; or replace the entire vent cap with a new one.

4. Gaps around interior vents and recessed lights: Inside your home, heated air can be leaking out around that same ventilation equipment, where vent pipes pass through the walls or ceiling, or where vent covers meet wall and ceiling surfaces. Recessed light fixtures can also be real air-leakers. Around the vent pipes and recessed light cans, seal any gaps with caulking. For the vent covers and recessed light covers, remove the covers, then adjust the springs and/or add foam weatherstripping tape to create a tight seal between the cover and the ceiling.

5. Heat-duct penetrations: Gaps around heating-duct cans where they pass through the floor or wall allow cold air to enter from the crawl space, while gaps around ceiling-duct cans allow heated air to escape into the attic. To close those drafts, first remove the register, then use a combination of caulking and/or metallic duct sealant tape to close any gaps between the sheet metal cans and the floor, wall or ceiling surface.

6. Fireplaces and woodstoves: Lots of gaps can occur around these appliances. With a conventional fireplace, keep the damper closed except when burning a fire to prevent heated air from escaping up the chimney. Consider investing in a set of air-tight doors, which close off the air leaks and also make your fires more efficient. Look for gaps around woodstove and gas fireplace flue pipes, and air leaks around masonry chimneys. Use a metal collar if necessary around flue pipe penetrations, and seal gaps with heat-resistant sealant specially formulated for this application.

7. Attic and crawl space hatches: These can be real air losers if they're not weatherstripped, so take care of that with some foam tape. Make sure the hatches are insulated as well.

8. Interior doors to unheated spaces: If you have any interior doors that lead to unheated spaces, including basements, garages or attics, be sure the doors are weatherstripped to prevent air leakage. If possible, replace older, hollow-core doors with solid-core or, better yet, insulated metal doors.

9. Sill plates and penetrations: This one's not as easy to deal with, but it's well worth the effort to try to do whatever you can with it. Air can leak both into and out of the house through gaps where the sill plate meets the foundation or the siding, and around plumbing and wiring penetrations drilled through wall plates in various areas. If you have a gap between your siding and the bottom of your exterior wall, especially in older homes where the use of sill sealers was not a common practice, consider closing up this big air gap with a bead of caulking or expanding foam. In the basement, crawl space and attic, if you can access any of the pipes and wires that pass through the wall plates, seal the penetrations with expanding foam.

Remodeling and repair questions? Email Paul at paulbianchina@inman.com. All product reviews are based on the author's actual testing of free review samples provided by the manufacturers.

... [ + Read Full Article ]