Tuesday Links

• Consumer Confidence in U.S. Falls the Most in Two Years; Home Prices Drop [Bloomberg.com]
• Subprime fallout heightens global rate doubts [reuters.com]
• Report: Area home prices down 6.96% in 12 months [washington.bizhournals.com]
• Mortgage Applications Decrease in Latest MBA Weekly Survey [mbaa.org]
• Md. is richest state, census figures show [baltimoresun.com]
• Despite slump, luxury home market still kicking [miamiherald.com]
• Fed Hoped Market Would Right Itself [nytimes.com]
• Small houses are a perfect fit for many homeowners [bankrate.com]
• How FHA Could Help Borrowers Refinance and Avoid Foreclosure [yahoo.com]

Is this the best time to buy a house?

You bet it is! The real estate market in Washington DC, Maryland and Virginia has never been more agreeable to buyers than now. This past weekend I was reading some statistical information provided by MRIS where it showed home prices have stabilized, interest rates have remained somewhat the same, the unemployment rate has decreased, and days on market for homes in the third quarter is expected to increase.

This is a great opportunity to snatch up that dream home you've always wanted at a huge discount! Home prices have come down anywhere from 3-8% over the last two years making it a buyers market.

In addition to lower home prices, most sellers are giving closing help and providing other incentives such as a home warranty, paying for condo fees for a whole year, and going as far as giving away a car if the home is purchased by a certain date! New home builders in the DC Metro area have not been immune to the real estate market. They have had to adjust by reducing the sales price, giving huge incentives such as a finished rec room, a sunroom, and upgrades galore to the prospective home buyer.

The interest rates have come down from last week from an average of 6.24% to 6.17% for a 30 year fixed mortgage according to bankrate.com (08/27/07). The unemployment rate has come down in this area and days on market have decreased from the first quarter of '07 to the second, but is expected to increase during the third quarter.

So if you have been sitting on the side lines this is the time to get in the ball game and get a great deal on the purchase of your home!

Graph Image provided by MRIS.

Are Builder Incentives Worth It?

As an extra incentive to purchase a new, home builders often include incentives to the buyer, these incentives can range from a $3,000 closing cost credit to a finished basement valued at $20,000 or more and everything in between.

These incentives almost always come with a catch however; one that few homebuyers stop to think about at the exciting time of signing the contract on their dream home. The catch is this: to qualify for the incentive, the buyer must use the builder's affiliated title and mortgage company.

Home builders are not being generous when they offer these incentives , they often make up all or most of the incentive through above market mortgage rates and title fees.

I purchased a property recently from a builder and spoke to the builder's mortgage company. They offered me an interest rate quite a bit higher than I could get elsewhere plus they wanted to charge me a point (1%). I declined their offer and the builder's incentive because it would actually cost me more to take their incentive with a higher mortgage rate and fees not to mention the higher title company fees.

In this case the incentive was on the lower end of the scale I mentioned above, if they were offering me a $20,000 incentive then maybe I would have taken their incentive and refinanced immediately. Even if they had offered me a $20,000 incentive, I would only net about half that after paying the above-market rates and fees.

A Homebuyer should always compare the builder's mortgage company rates and fees and title company fees against the marketplace to determine if their incentive is worth it. In many cases they are not.

There are currently several class action lawsuits around the country against builders for violating the Real Estate Settlement Procedures Act
(RESPA) because they require the use of a specific mortgage and title company to get an incentive. The outcome of these lawsuits is to be determined, but I hope they make builders think twice before trying to dupe homebuyers with less than stellar incentives.

Posted by Kevin Shipe, an attorney for Professionals Title and Escrow Co. To read more regarding the company please visit their website at http://www.titlepros.com/.

REAL ESTATE IS LOCAL

Many of you probably are confused by the news and many real estate articles circulating in the various newspapers giving mixed reviews to the real estate and mortgage industry as a whole. But one thing that you have to keep in mind is that REAL ESTATE is local. What is happening in Austin, TX or in New York, New York is not the same as here in the DC, Maryland, and Virginia real estate market.

You have to keep an open mind that the industry as a whole is not suffering but rather certain pockets of our industry. A perfect example of this is the subprime woes and how it has affected the economy as a whole. The first thing you have to keep in mind is that the subprime market is only about 20% of the total loans originated and most of the people who got subprime loans probably should not have bought in the first place because of their poor credit rating and lack of money. Banks in the past made it so easy for anybody to get a loan that now they are suffering the consequences and have since tightened their guidelines to the detriment of many perfectly qualified applicants. Why do I say this? Well there are some people that are self employed and make a lot of money but unfortunately do not document it. Therefore a stated-stated loan would be ideal for them since we don't have to verify the income BUT nowadays these loans have almost dissapeared and if they are still around the interest rate would definitely discourage anyone to get into these loans.

Since late 2005 we have seen a downturn of the DC, Maryland, and Virginia real estate market as well as other aregions. This was inevitable. Our market cannot sustain this type of growth for a prolonged period of time. No one would be able to afford a house and that is why we have what analysts are calling a "CORRECTION".

Prices since late 2005 have plummeted as much as 10-20%. This is good for buyers and the economy as a whole. After several years of sellers demanding above asking price and demanding that home inspections be waived the tables have turned and buyers are in charge. Buyers are reducing even further asking prices and asking for concessions left and right, and you what, they are getting them!

So lets put this into perspective and if you are in the market to sell your home understand what you are getting yourself into. Price your home accordingly, be ready to negotiate, and have it in model home condition! Buyers you can probably ask for just about anything and get it, but let's be realistic and fair just like the sellers were a couple of years ago.

Good luck on your house hunting!

Posted by Darwin Romero pricipal broker of ACCENT Realty Corp. For more information on the writer and the company please visit the following website: http://www.accentrealtycorp.com/

ENTERING MY THIRD DECADE

It seems like it was yesterday that I was an eager teenager ready to conquer the world and now that I turn 30 I look back at what my life has been and I thank God for evey moment he has given me.

I am proud that I have served my community in Montgomery County, Maryland as a realtor for tha last seven years. Thank you all for your support and confidence in me. I also would like to thank my family, sisters karla, katherine and victoria, little brother Daniel and my parents for all their support. And of course to my beautiful wife Marina and two wonderful sons Ulises and Lucas. I love you all and I look forward in sharing my life with all of you for many years to come.

COMING SOON: NEW FICO SCORING METHOD

Recently the Fair Isaac Corporation (FICO), the most well known and widely used credit score model, has issued a press release indicating that starting in September of this year there will be a new scoring system.

The most affected by this change will be authorized users and people with fairly new credit scores. In the past, consumers were given the benefit of the doubt and there score originally appeared in the high 700's, but now with the new scoring system this will probably not be the case.

The new scoring system will take into account two important factors in the credit score: 1) the length of time these accounts have been opened and 2) that these accounts actually belong to the consumer applying for credit.

We know that our credit score is largely determine by the following factors:

1)35% by how we have paid in the past
2)30% by the balances we carry
3)15% length of history
4)10% by the different types of credit used
5)10% by the recent search for credit

As we can see only 15% of the score is determined by the length of credit history. Probably most consumers will not be affected after all. What do you think?

Graph provide by http://www.myfico.com/CreditEducation/CreditScores.aspx?fire=5.

LARGE RAMBLER AT AN UNBEATABLE PRICE- $450,000

Who says you can't have it all? This wonderful home offers plenty of space to grow in a serene
environment. It has four bedrooms and three full baths, two kitchens (one on the main level and the other in the fully finished basement), three additional rooms in the basement that can be used for just about anything.

Imagine having the Cross Creek golf course be your front yard and a wonderfully landscaped backyard provides more than enough space for those summer cook outs. In addition to the large lot this home has plenty of parking with its double wide concrete driveway that is partially covered- it can easily accomodate 4-6 cars. The home has been recently updated with fresh paint, refinished hardwood floors, new carpeting in the basement, updated bathrooms, and newer appliances.

Enjoy entertaining guests and family in your very own formal dining room and preparing those sumptious dinners in your country kitchen. The competition doesn't even come close to this one. For more information please contact the listing agent at darwin@accentrealtycorp.com