Hurlbuthomes.com Blog

Seattle just eeked in at #10! Which is really good news for the cities surrounding it as well!

Read on from Forbes Magazine:

Four factors are widely seen as affecting whether a housing market is a good one for sellers: job growth, amount of new construction, vacancy rates, and credit availability.

Forbes magazine used a variety of resources to determine how the country’s 40 largest metro areas fared according to these measures. The result is this list of top 10 cities for sellers:

1. San Jose, Calif. Because of a tough regulatory environment, new home construction dropped 63 percent last year.
2. San Francisco. When the conforming loan limit recently jumped from $417,000 to the maximum $729,750, that made credit much easier to get for many of the city's home buyers.
3. Salt Lake City. The 3 percent annual job growth rate, paired with a declining inventory of existing homes and one of the nation’s sharpest declines in construction made this market a good one for sellers.
4. Austin, Texas. Texas is very affordable, plus the city has the nation’s fastest job growth at 4.1 percent.
5. Kansas City, Mo. The number of unsold, vacant houses dropped by 40 percent last year.
6. San Antonio, Texas. Jobs are growing by 3 percent and construction starts have dropped by 42 percent.
7. Denver. The 49 percent drop in construction starts paired with the 2 percent rise in new jobs are good news for sellers.
8. Providence, R.I. Vacancy rates at 1.6 percent combined with a 42 percent cut in inventory help sellers.
9. Charlotte, N.C. Moderate prices and strong job growth bode well for sellers.
10. Seattle, Wash. Strong job growth and a 42 percent decrease in new home construction are good news for sellers.

Source: Forbes, Matt Woolsey (04/07/08)

Hi, my name is John and I'm a mortgage Junkie. HI JOHN! It's been two years since my last mortgage, but I think about them all the time.

OK, I don't think there is a 12 step program for mortgage junkies, but I suppose in some way their could or should be. When I bought my first home in 1996, I paid $90,000 for it and obtained an FHA loan with 3% down and the dreaded PMI that came with it. I was so happy to just be able to buy a home that I really didn't care what the terms or conditions of the loan were, the place was mine! A couple of years later, after I got a little smarter, I realized that the PMI was eating into my monthly payment quite a bit and I asked my mortgage person how to get rid of it. Easy! He said, we just need to do an appraisal, see if you have 20% equity and if you do, we'll re-finance you! So out came the appraiser and in a matter of a few weeks, I had spanky new 30 year conventional mortgage, oh and my car and credit cards were paid off too!

A few years after that, I had a new car and even more equity, so I re-financed again into another 30 year conventional mortgage and paid off even more debt. A couple years later, after getting a new job, I thought well why not take some of this additional cash and pay down my mortgage, so I re-financed AGAIN and got into a 15 year conventional mortgage. After starting in Real Estate, I decided to do some major upgrades to the home and re-financed again into a 30 year fixed mortgage and put in new windows, air conditioning and a sprinkler system.

When I sold my home and bought my new one, I sold my home for $247,000, but owed $200,000 on it! I had obviously been living well above my means, but in a rising market, it really didn't much matter. The new mortgages (yes, that's plural) on my new home are a 5/1 Interest only ARM on my first and a 30 year fixed for my second. I put 5% down on the home, so 80% was financed on my first and 15% was financed on my second to avoid the dreaded PMI. I've vowed to never take money out of my home again to finance consumer goods. I'll suffer with my car payment and any credit card debt I have so as to not touch the equity in my home. Especially in these uncertain times.

What's the point of this article? There has been much negative attention surrounding interest only, adjustable rate, zero down, option payment plans, etc. that I merely wanted to point out that any loan you get into can be a good loan, despite the terms. You simply have to know what you're getting into.

When I bought my new home I was positively convinced that when my 5/1 interest only ARM reset that I would have gained more in equity through appreciation than by paying on a 30 year fixed loan. I did hedge my bets a bit by putting 5% down AND paying down the debt ever so slightly by having a traditional 30 year fixed loan for my second. Now almost two years into the loan, I probably have not gained any equity in the home, but I've still got 3 years for that to turn around. Even the worst predictions have the housing slump turning around by late 2009. So I will be fine.

I've had just about every type of loan out there, FHA, Conventional, Interest Only, Adjustable Rate, etc. And I can tell you they're not as bad as the media likes to make them out to be. Depending on your situation and your plans for the home, length of time you're going to live there, etc., there is an ideal mortgage for your situation. So sit down with your Real Estate professional or Mortgage professional and determine what that type of loan is and why. And for goodness sake, if it doesn't feel good in your gut, DON'T SIGN! AND finally, if you go to closing and anything significant has changed (interest rate, monthly payment, etc.) since your good faith estimate was done, DON'T SIGN until you talk to someone that can give you a straight answer as to why it changed.

I was at Lowes this weekend to get some keys made for CitiLife. While there, I had occasion to talk to the woman making the keys and as often does, the topic of real estate came up. She said she was thinking about buying a home, but needed to save up for the down payment first. I mentioned that if she had decent credit, there were a number of zero down loan programs still available. The look of horror quickly spread across her face and I knew I was again going to don my spandex suit and become John, The Negative Real Estate News Combatant - Fighting for all that is good and pure in the real estate industry. OK, lets ditch the spandex suit for my shirt and tie eh? I don't think ANYONE wants to see that!

I quickly told her that much of the negative press that has been going around lately has been focused on the loans people have obtained in the past few years. I went on to explain that as is often the case, the media isn't necessarily giving you the whole story. There are MANY SAFE zero down loan programs and many of them are government insured.

The tension in her face relaxed a little bit and she prodded me for more information. I explained that veterans have been getting the benefits of zero down programs for decades with the VA loan program. And further, an FHA loan combined with the likes of a Nehemiah program can also get you into a home with zero down and you've got the security of an FHA loan behind it all. Couple all that with homeowners more than willing to do whatever it takes to attract a buyer that can fog a mirror, let alone actually qualify to buy their home and it's a perfect time for first time home buyers to think about zero down loan programs.

Are zero down programs for everyone? Absolutely not, it would be reckless for me to suggest otherwise. But to imply that zero down programs shouldn't even be considered, as the main stream media often suggests, would be equally as reckless. So without further ado, here are John's top 5 reasons one should and should not consider a zero down program:

When to consider a zero down program:

• You don't have any money for a down payment
• You intend to stay in the home for a minimum of three to five years
• You understand that IF you need to get out of the home before the three to five year mark, you could be faced with owing more money than the sale of the home would net
• Your credit score is above 620 (Ideally above 700)
• You've discussed with your real estate professional and mortgage consultant your individual situation and have decided this is the best program for you

When NOT to consider a zero down program:

• You have 5% or more ear marked for a home down payment. (Ideally 20% to avoid PMI)
• Your housing situation is uncertain (Yes VA eligible current service members, this includes YOU!) or you do not intend to own the home for at least 3 years (5 is better)
• You have a credit score of less than 620 or have a poor track record of paying your bills on time
• You got some unbelievable unsolicited offer in the mail (Or heard on the radio or TV) from an unknown mortgage company that seems just too good to be true! (NOTE: It probably is)

The best thing you can do is sit down with a trusted advisor (Your Realtor or Mortgage Pro) and discuss your individual situation. The above are only guidelines, but zero down programs do not have to be evil and in fact they can benefit many prospective home buyers that may not otherwise be able to purchase a home.