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Nov. 15, 2009 - Preparing to Buy a Home

Are you preparing to buy a home for the first time? Or have you closed on a number of homes in the past and are preparing to buy your next home? Regardless, you'll want to keep in mind the steps necessary to successfully navigate the preparations for buying that next home.

Initially, you'll want to determine your income, debts and savings and decide what you can afford. Instead of doing all the calculations and attempting to make the determinations yourself, you may want to decide on a reputable lender and have them do it for you through a prequalification. If you know that you will not be accumulating any further debt, the prequalification will tell you how much you will be able to loan for your next home.

A word to the wise, however, is that you may want to consider buying a home that is 10 percent less than what you are prequalified for. It will give you more wiggle room for future unforeseen purchases.

Finding a lender is easy. They can be located throughout the Internet, in the Yellow Pages, at mortgage brokerages and in banking and financial institutions. Finding a good lender, though, may not be as easy.

You'll want to find a reputable lender who can give you the best deal and you'll want to find a loan that meets your needs, preferably one that has a low interest rate and relatively low monthly payments.

If you've used a lender to buy a home in the past that you trust, you may want to start there. For a broader selection of lenders, however, comb through the Internet for sites that display the Better Business Bureau (BBB) or other accreditations. Also, talk to friends and family about lenders they have successfully used in the past. You might want to consider a mortgage broker over a banking institution. They have a access to a variety of lenders who offer a variety of options.

Pick ten lenders total to inquire about a home loan. Ask about different loans available and which ones might work best for you. Depending on your buying situation and the number of years you intend on owning the home, you may want to consider an adjustable rate mortgage (ARM) or balloon loan with a refinancing option as opposed to a traditional fixed-rate mortgage.

When you decide on the loan type, get a quote for interest rates, APRs and all fees associated with the loan from each lender, and request that they send the quotes to you in writing. Make sure when you request the interest rate that you ask how long the rate is good for (through what date).

Try to obtain all this information within a week's time, so that interest rates don't fluctuate too much. They actually can from day-to-day, depending on trading market activity.

Once you find a lender and know how much you will be able to loan, you'll need to find a home to buy. You probably already have in mind what you want in your next home. A licensed realtor, however, has access to a variety of resources to enable you to most successfully find your next dream home.

Inquire of friends and family in order to find a reputable realtor. If no one knows of one, look in the local phone book and pick out three different realty companies to contact. You'll want to either ask for the realtor with the most closings or for the realtor who has just been licensed.

Many people suggest that you use the realtor with the most closings, because they experience the highest rate of success in sales. New agents, however, can be just as valuable, since they are hungry for a sale and will often go beyond the call of duty, even beyond that of those who are very experienced, in order to sell your home.

Use your intuition in deciding on realtors to interview in person. Put together a short questionnaire that you ask of each when you initially speak to them over the phone. You'll want to ask each of them for two references of people who have used them in the past.

Some questions you might want to ask of experienced realtors in your phone interview are:

* How many homes have you listed versus how many you have sold in my subdivision, neighborhood or city (whichever are applicable) in the last year, or the past (whichever is most relevant)?
* What types of advertising do you use to promote the sale of homes you list - multiple listing service (MLS), flyers in tubes at the curb of the home, newspaper advertising or other media outlets, agent open houses, public open house, etc.?
* How many homes do you have listed currently on the market in my subdivision, neighborhood or city?
* Do you have any marketing materials?
* Do you have any additional accreditations? If so, which ones?
* Will you be my only point of contact or do you have others who would be assisting me through the process?
* What commission do you charge? Some can vary as much as 2 percent.

Questions for new realtors may be as follows:

* What did you do as a profession before you became a licensed realtor?
* How did you approach your previous profession in order to be a success?
* What will your plan be to sell my home?
* What types of advertising will you use to promote the sale of my home - multiple listing service (MLS), flyers in tubes at the curb of the home, newspaper advertising, agent open houses, public open house, etc.?
* How are you building your reputation as a new realtor?
* Do you have any marketing materials you can provide to me?
* Do you have any additional accreditations? Is so, which ones?
* Will you be my only point of contact or do you have others who would be assisting me through the process?
* What commission do you charge? Some can vary as much as 2 percent.

Some of the items you request over the initial phone interview may have to be provided when you meet face-to-face. For the in-person meeting, however, you'll want to include the following questions:

* Do you update your clients regularly regardless of whether there is new information to provide? If so, at what regular intervals?
* What is your marketing strategy to sell my home?

You may think of other questions that are pertinent to your situation. Jot them down before the interview and don't finalize the interview until all your questions have been answered.

After the interviews are completed, compare commission and responses of each. Decide on which licensed realtor you'll use, and you'll be well on your way to obtaining your next home purchase.

Ki maintains a website, which works as a clearinghouse of information on Austin real estate. There, future homeowners can search the Austin MLS. Ki has worked with Austin buyers for over three years. He also provides up to date information on mortgage rate trends on his site.
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Nov. 15, 2009 - The Ripple Effect of Foreclosure

Having the bank seize your home is nobody's idea of a good time. A word that was hardly part of the American vernacular two years ago, foreclosure is all too common these days. While the number of homes in some state of foreclosure is decreasing each month, the fact is that foreclosures across the country are up 19 percent from a year ago (RealtyTrac).

According to the Associated Press, one in every 385 homes received some sort of foreclosure-related notice in October. Foreclosure is a multi-step process that often begins with the loss of a job, includes several stages and can end with ruined credit. Banks repossessed over 77,000 homes last month, dramatically changing the lives of hundreds of thousands of people. What is harder to quantify is the ripple effect foreclosures have in not only devastating a single family, but also affecting an entire community.

A homeowner not only loses the house, but also all the money put into the house. The homeowner walks away from all the equity and any money spent on improvements. The tax liability and bad credit can linger for years after a foreclosure. Families can be uprooted and long-standing social ties can be broken. Emotions can run high and a person's self-esteem and sense of well being can be battered.

Then there is what can be called the "spillover effects" of foreclosure. Beyond the homeowner who lost a home, the property values of surrounding homes can be negatively affected. In the broader view, this can affect the local property tax base, which has far reaching implications for an entire city. Because the foreclosure can be drawn out, homes often remain empty for months. Empty or abandoned homes can fall into disrepair and even invite crime.

These are unusual times with the country still reeling from the Great Recession and perhaps unusual steps are needed to keep more struggling homeowners out of foreclosure. Both the Federal Reserve and the Treasury Department have enacted programs to get lenders to work with homeowners. Programs offering mediation before a bank can seize a property have helped in states like Nevada, where the foreclosure rate is the highest in the nation. (AP)

The recent decline in foreclosures is largely attributed to these measures by the government to encourage banks to work with homeowners before foreclosing. However, those efforts are only a drop in the bucket. The AP reported that about 650,000 borrowers, or 20 percent of those eligible, were taking part in temporary trial plans. The reality is that since the beginning of September, only about 1,700 loan modifications had been made permanent.

It's been reported that lenders are making efforts to delay foreclosure as they evaluate which borrowers might qualify for the government's loan modification program. Also, housing prices have started to climb again after three years of startling declines. This helps reduce the number of homeowners who owe more than their home is worth. As foreclosures remain at a crisis level, affecting a wide range of people, the Obama administration may need to push more lenders to take part in loan modification plans--for all our sakes.


Ki enjoys sharing his passion for Austin Texas real estate with future homebuyers. One way he distributes information in through his website, which offers a free search Austin MLS search. He lives and works in Austin, Texas. And writes on his blog about Austin real estate.
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Nov. 15, 2009 - Mortgage Rates Continue to Fall

While the expectation has been that mortgage rates would start to rise they have fallen for the last 2 weeks. This week the 30 year rate fell from 4.98 to 4.91 (last week it fell from 5.03 to 4.98). Besides October 8th its the lowest rate we have seen since the start of the summer. So how does 4.91 fit in with historical mortgage rates. Its lower than any point before March 26, 2009. Its also the 11th lowest recorded rate in history (all of the 10 lower recorded rates occured in 2009).

While the 30 year mortgage rate is the most watched rate the other 3 major mortgage products fell as well. The 15 year rate fell from 4.40 to 4.36. The 5 and 1 year arm fell from 4.35 to 4.29 and 4.47 to 4.46. The 1 year arm is now higher than the 5 year arm and the 15 year arm. Below are rates from the weeks from Nov 12th, 2009 to October 15th, 2009.

Nov 12, 2009
30-yr 4.91 15-yr 4.36 5-yr ARM 4.29 1-yr ARM 4.46

Nov 05, 2009
30-yr 4.98 15-yr 4.40 5-yr ARM 4.35 1-yr ARM 4.47

Oct 29, 2009
30-yr 5.03 15-yr 4.46 5-yr ARM 4.42 1-yr ARM 4.57

Oct 22, 2009
30-yr 5.00 15-yr 4.43 5-yr ARM 4.40 1-yr ARM 4.54

Oct 15, 2009
30-yr 4.92 15-yr 4.37 5-yr ARM 4.38 1-yr ARM 4.60

Apr 23, 2009
30-yr 4.80 15-yr 4.48 5-yr ARM 4.85 1-yr ARM 4.82

At this point the 1 year arm, being higher than the 5 year arm, is out of the picture. The 5 year arm is substantially lower than the 30 year rate. But it still seems like a worse option than the 30 year mortgage. First the 30 year rate is pretty low (the 11th lowest rate in history). In addition the expectation is that rates will move up so the benefit of getting a lower rate with a 5 year arm is outweighted by locking in for a short period of time.

In addition to rates its also interesting to look at mortgage payments. We took today's rates and using a mortgage calculator determined the payment for a 200k loan. We also did the same thing with rates from October 29th and April 16.

Nov 12
30-yr $1062.66
15-yr $1515.71
5-yr ARM $988.56
1-yr ARM $1008.62

Oct 29
30-yr $1077.31
15-yr $1525.9
5-yr ARM $1003.88
1-yr ARM $1021.7

Apr 16
30-yr $1018.12
15-yr $1574.3
5-yr ARM $1052.96
1-yr ARM $1051.74

Compared to two weeks ago a payment is 1.35 percent lower and for a 200k mortgage payment the payment is $14.65 less now than it would have been two weeks ago. While this is not a huge difference its not totally insignificant.

So what is our advice to people currently looking to get a loan? With rates near historical lows its probably a good idea to lock in rates earlier rather than later. While their is a chance that rates could move lower its doubtful they could fall too much lower than where they stand today. On the other hand there is more of a risk of mortgage rates moving up in the next few weeks.

Ki lives, and works, in Austin, Texas. He maintains a website escapesomewhere.com for future buyers of Austin real estate. The site offers information on historical mortgage rates along with a mortgage rate widget.
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Nov. 15, 2009 - Crazy Weather from Coast to Coast

After an exceptionally hot, dry summer, the rain has finally come to Central Texas. Just how much rain will it take to alleviate the current drought conditions? Considering this is the worst drought Central Texas has experienced since the 1950s, the answer to that is difficult to quantify. Don't expect any let up in the current water restrictions.

According to the Lower Colorado River Authority, year to date the area rainfall is 8 to 12 inches below normal. However, this is the second year of lower than normal rainfall, making it closer to 16 to 20 inches below normal. There are five levels of drought, and a good portion of Travis County has been at the highest "exceptional" level for many months.

According to the Associated Press, drought conditions in Central Texas are improving, especially as the rain keeps coming. Williamson and Burnet Counties, and even parts of northern Travis County are now considered to be in a moderate drought. However, the southern half of Travis County and all of Hays County are now considered to be in a severe drought, upgraded from exceptional drought. Just in the last year of this two year drought, it is estimated that the drought has caused more than $3.6 billion in crop and livestock losses.

What isn't changing significantly, even with all the recent rain, are the lake levels. The National Weather Service says it will take "several periods of sustained heavy, soaking rains to begin refilling lakes Buchanan and Travis." While that kind of rainfall gets the lake levels and local water supplies back to where they are supposed to be, it brings other consequences as well. Just ask Atlanta what it's like to go from drought conditions to catastrophic flooding.

From the drought in Texas to the floods in Georgia, it's difficult these days to find a part of the country not experiencing some kind of unusual weather. According to the National Weather Service, September saw above-average temperatures for most of the country. That is hardly the case in October, as Colorado to Minnesota are seeing early snow. There is more heavy rain forecasted in the south, something places like Atlanta doesn't need. California has gone from wildfires to the danger of mudslides as that state braces for storms. And, then there is a heat wave in Florida.

Much of this crazy weather from coast to coast can be attributed to the climate phenomenon known as El Niño, which affects weather patterns around the globe. According to the National Oceanic and Atmospheric Administration, we are in the midst of an El Niño pattern that will have both a positive and negative impact for the next several months. On the positive side, the hurricane season has been milder and the dry southwest will get some much needed rain. "El Niño's negative impacts have included damaging winter storms in California and increased storminess across the southern United States." Starting to sound familiar, isn't it?


Ki graduated from college in Austin, and couldn't leave. He created a website to provide information on the Austin real estate market to future buyers. Anyone can search for homes in the Austin MLS on his site. His site also provides a search for Austin commercial real estate.
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Nov. 5, 2009 - Famous Historic American Homes

There are a plethora of historic homes existing in the U.S. today. Some are noted for their connection to our heritage as a nation. Others are famous for their association to crime, criminals and movie stars. And, of course, you've got literary greats, real estate tycoons, media moguls, publish giants and all the rest. Here, you'll find just a few with details that might surprise you.

Robert E. Lee's old home, AKA Custis-Lee Mansion, became home of the honorable Arlington National Cemetery. Overlooking the Potomac River, the Greek revival style manor was selected by the government as the site for the cemetery to ensure that Lee never again returned to his home after the Civil War. Sitting on 1,100 acres, the mansion hosts two kitchens for the summer and winter. The most prominent features of the estate are the eight massive, 5-feet-in-diameter columns supporting the portico. The mansion is managed by the National Park Service, while the surrounding grounds, known as Arlington National Cemetery, are managed by the U.S. Department of the Army.

William Randolph Hearst, newspaper magnate and grandfather to the infamous Patti Hearst, once owned a mansion at 1101 N. Beverly Dr. in Beverly Hills, California with his actress girlfriend Marion Davies. Built in 1926, it's estimated worth is $165 million with 9 bedrooms, 15 bathrooms, 20,570 square feet of living and sits on a 153,766 square foot lot. Just a small slice of heaven right there outside of Hollywood. If you were in the market to buy the property with a 30-year, fixed-rate loan at, let's say, 4.91 percent with 20 percent down, you'd have estimated monthly payments of just $31,645. Can you say cha-ching?!

George Washington Vanderbilt II completed the construction of the Biltmore Estate in 1895, which is located in Asheville, North Carolina. With 250 rooms in 175,000 square feet of living space, the home is the largest privately owned estate in the U.S., and is still owned by Vanderbilt's grandson, William A. V. Cecil II. The French Broad River divides the estate in half. Resting magnificently on 8,000 acres, the mansion echoes the sentiment of an elaborate French chateau and the excesses of the America's Gilded Age. It was inducted in the National Historical Society and designated a National Historic Landmark in 1964. Tourists worldwide visit the palatial estate throughout the year. Featured are a 70,000 gallon indoor swimming pool, a bowling alley, a two-story library, dated antiquities throughout and 75 acres of formal gardens with a winery and triple A, 4-diamond, 213-room hotel called the Inn on Biltmore Estate. Tickets to tour the estate may be purchased in advance on the Biltmore website.

David Gamble of Proctor & Gamble fame hired architectural firm Greene & Greene (G&G) to design the Gamble House (AKA David B. Gamble House), which was completed by 1909. Located in Pasadena, California, the estate was declared a National Historic Landmark in 1977. Matching inlay was designed by G&G for the custom-made furniture and tile mantle surrounds, which were built by contractors Peter and John Hall. A secret door that leads to the kitchen is hidden in one of the wooden panels of the entry hall. Another panel leads to a clothes closet. The three-story, Arts and Crafts masterpiece, influenced by Japanese aesthetics, sits on an expansive acreage decorated generously with Arroyo stone paths that give the effect of running brooks. Realizing the artistic significance of the estate, the Gamble family deeded Gamble House in joint ownership to the City of Pasadena and the University of Southern California School of Architecture in 1966.

Al Capone stunned law enforcement with his ability to divert indictments and skirt the law. Infamous for his crime syndicate leadership during the Prohibition Era, Capone lived much more modestly in private in contrast to his flamboyant public persona. Located at 7244 S. Prairie Avenue in Chicago, Capone's 4-bedroom, 2-bath, modest unit in the multi-family home was built in 1908. Last heard, the home was for sale for a mere $450,000. If you wanted to buy it at a 30-year, fixed-rate loan at 4.92 percent with 20 percent down, you'd pay an estimated $1,915 per month.

Nathaniel Hawthorne immortalized the House of the Seven Gables in his literary fictional novel with the same name. Located in Salem, Massachusetts, the home is currently a non-profit museum and still functions as an active settlement house hosting programs for children. Although Hawthorne never lived in the home, he visited his cousin Susannah Ingersoll who lived in the home when he was growing up. One quite clever creation found in the home is what looks like a wooden closet. The false back, however, opens to a hidden staircase leading up to the attic.

Erotica king Hugh Hefner lives in his current Playboy Mansion (AKA Playboy Mansion West) in Los Angeles, California. Located at 10236 Charing Cross Road in Holmby Hills, the manor is famous for its lavish parties and rumored orgies. Built in 1927, the 14,217 square foot home sits on a 219,107 square foot lot and was acquired by Hefner in 1971 for $1.1 million. With 29 rooms, the estate hosts a game room, wine cellar, an aviary, a zoo, tennis courts, waterfall and a swimming pool, along with a sauna and bathhouse. One room in the palatial home known as the "Elvis Suite" has been kept off limits to public viewing. Hefner said the room holds sentiment due to the one night that Elvis Presley stayed in it in the early seventies. He was accompanied by no less than eight girls. Although, sports stars, movies stars and rappers request the suite when they come there, Hefner says he's kept it off limits.

Ki caters to future buyers of Austin real estate. He has a searchable website of Austin homes for sale. He site has statistics and info on Cedar Park and Austin real estate
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Nov. 5, 2009 - Storm Clouds on the Solar Horizon

This is the conundrum of doing good things for the environment: How do you embrace green energy without the old technology providers becoming broke and obsolete in the process? That is the dilemma faced by the City of Austin and Austin Energy as they try to promote solar energy.

Austin Energy began an initiative to increase solar power in the community by offering rebates for installing solar roof-top panels. It is one of the largest solar rebate programs in the country and has provided more than $18 million in solar rebates since 2004. It has been so successful, in fact, that the program had to be revamped recently to accommodate the volume of customers who want to take advantage of the solar rebates. The 400 applications received so far this year far exceed the Austin Energy budget for the program.

Now Austin Mayor Lee Leffingwell has proposed a new program called "Energize Austin" to provide solar power to more people in the community. The program would offer low-interest loans to allow people to install solar arrays on the roof of their home. A large enough solar panel system could essentially eliminate electricity bills, and greatly reduce the income for electricity providers like Austin Energy.

A solar array works through photovoltaic technology that turns sunlight directly into electricity. An average customer can get 10 -40 percent of their electricity through solar panels on the roof. Austin Energy also offers "net billing" meaning that customers using solar energy can get credit for the times the solar panel produces more energy than a home consumes. Solar panels are easy to maintain and can be easily upgraded to larger systems from the existing system.

According to Austin Energy, the whole community benefits from solar power because it is a clean, quiet, renewable energy that reduces the need for energy made from fossil fuels, like coal and oil. It offers a cleaner, healthier environment, as well as creates economic opportunities. For example, due to the success of the solar rebate program, Austin Energy went from using four installers to 24.

But with the City now proposing to loan customers the money for the cost of installing a solar array, something the rebate program did not do,
Austin Energy is concerned that solar energy use in Austin could expand too quickly. According to the Austin-American Statesman, Austin Energy General Manager Roger Duncan says "the city could have trouble maintaining its grid unless it comes up with a new business model for the utility." Austin Energy is using a 10 year plan for the rebate program to allow for the price of the technology to become more competitive.

Austin is probably not unique in this green dilemma. Berkeley, CA came up with the loan idea that Leffingwell is now proposing for Austin, however solar advocates say it did not dramatically change solar use in Berkeley. Austin Energy should be commended for its many green initiatives, not just the solar rebate program. The hope is that there is a way forward to improving the environment without everyone, including the companies that have provided services for decades, having to pay too high of a price.


Ki lives in the Austin area, where he enjoys biking the hill country. His website compiles information on Austin Texas real estate. His site has a graphical search of the Austin MLS along with a statistics blog on Austin real estate.
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Nov. 5, 2009 - Looking at Executive Compensation and the Great Recession

The fact is that the financial meltdown, now widely known as the Great Recession, started on Wall Street. It is also a fact that the meltdown quickly reverberated off the pavement of Main Street in the form of foreclosures and job losses. These things are clear. What is harder to understand is why so many on Wall Street continue to prosper while Main Street is still in shambles.

Perhaps the most blaring of the Wall Street bling is what has become the hated catch-phrase of this recession: executive compensation. While there have been rumblings and rumors of this from day one of the financial meltdown, reports came out in October that the executives of the top seven banks receiving government bailout money would also be receiving billions in bonuses. Big bonuses to the Wall Street elite is not new news, a fact Time magazine recently pointed with an article on the long history of executive pay.

In the 1890s, banker J.P. Morgan made 20 times what the average worker earned. By 1991, CEOs were earning 140 times what the little guy made. The trajectory of executive pay continues to rise, with an average S&P 500 top executive in 2007 earning in just three measly hours what a minimum-wage worker made in a year. Believe it or not, Plato recommended that top earning individuals in a society should never make more than five times what the lowest earner was paid.

Why do these executives get paid so much? If you ask them, they deserve every penny because their prosperity is necessary for everyone else to prosper, too. Goldman Sachs international chairman recently said, "We have to tolerate the inequality as a way to achieve greater prosperity for all." The research to back these claims has so far been mixed. However, there is some empirical evidence that Wall Street pay has reached a level that no longer supports the prosperity-for-all claims.

The recession certainly seems to bear that data out. The indignant uproar over executive compensation at companies that received bailout money has led to the appointment of a "pay czar." Treasury Department official Kenneth Feinberg has been commissioned with reining in the pay of the top 25 executives at each of the seven financial companies receiving the largest portion of bailout funds.

The pay czar proposes to cut salaries and bonuses of those top executives in half, capping salaries at $500,000 and bonuses at $25,000. The hope is that limiting the compensation will in turn limit the amount of risks financial executives are willing to take. The Federal Reserve plans to take limiting risky banking even further. According to the Associated Press, the Fed proposes to monitor executive pay at thousands of banks, even those that didn't receive a dime of bailout funds.

The reality is that Wall Street will always make considerably more than the average (and even the not-so-average) Joe on Main Street. The argument can be made that these are very talented financial wizards who do more good than Main Street realizes. However, the Great Recession offers a powerful counter argument about too much pay and a cautionary tale about taking too much risk.


Ki lives in Austin Texas and works in the Austin real estate market. His site has a search for listings in the Austin MLS. He also has information on mortgage interest rates and general information on Austin real estate
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Nov. 5, 2009 - Mortgage Rates Fall Back Below 5.00

After rising steadily for the last 3 weeks mortgage rates fell back down this week. The 30 year rate fell from 5.03 to 4.98. The 15 year rate fell from 4.46 to 4.40. The 5 and 1 year arm fell from 4.42 to 4.35 and 4.57 to 4.47 respectively. This looks like more of a hiccup as mortgage rates steadily start there rise. At this point the overwhelming consensus is that mortgage rates are going to rise in the next six months. But the lowered rates do provide an opportunity for potential homeowners to lock in rates at sub 5.00 rates. Below are rates from the weeks from October 8, 2009 to November 5, 2009.

Nov 05, 2009
30-yr 4.98 15-yr 4.40 5-yr ARM 4.35 1-yr ARM 4.47

Oct 29, 2009
30-yr 5.03 15-yr 4.46 5-yr ARM 4.42 1-yr ARM 4.57

Oct 22, 2009
30-yr 5.00 15-yr 4.43 5-yr ARM 4.40 1-yr ARM 4.54

Oct 15, 2009
30-yr 4.92 15-yr 4.37 5-yr ARM 4.38 1-yr ARM 4.60

Oct 08, 2009
30-yr 4.87 15-yr 4.33 5-yr ARM 4.35 1-yr ARM 4.53

Apr 16, 2009
30-yr 4.54 15-yr 4.93 5-yr ARM 4.83 1-yr ARM 4.82


As has been the case for several months the interest rate to watch is the 30 year rate. When rates are low (and the expectation is that they are going to rise) there is no real reason to look at short term ARMS.

In addition to looking at rates we also calculated the mortgage payments for a 200k loan based on today's rates.

Nov 05
30-yr $1071.19
15-yr $1519.78
5-yr ARM $995.62
1-yr ARM $1009.8

Oct 22
30-yr $1073.64
15-yr $1522.84
5-yr ARM $1001.52
1-yr ARM $1018.12

Apr 09
30-yr $1015.74
15-yr $1573.26
5-yr ARM $1043.29
1-yr ARM $1057.8

This show how little rates have moved in the last two weeks. For a 30 year loan on a 200k mortgage the payment is $2.45 less a month for a decrease of about 1/5 of 1 percent

So what is our advice? First I would avoid anything but a 30 year mortgage. Their is simply too much of a chance of higher rates. Second I would start looking for a mortgage earlier in the process instead of later. Basically their are too many issues with lending right now and it's a good idea to find out any issues to get a loan earlier in the process. Second it's a good to check into the 7,500 tax credit. The new program has expanded the eligibility so if you didn't qualify for the 8,000 tax credit you might qualify for the new one.


Ki works, and lives, in Austin, Texas. His website arranges details on the Austin Tx real estate market. It also has graphs of mortgage rate trends and a few free mortgage widgets.
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Nov. 1, 2009 - Traditional Home Loan or ARM?

If you're obtaining a mortgage and contemplating whether to get a traditional home loan or adjustable rate mortgage (ARM), there are definitely some things you'll want to consider.

Before deciding on either, you'll want to understand the dynamics and look into the advantages and disadvantages of each. Some considerations to keep in mind are how long you intend on keeping the home; whether one of your intentions in buying a home is to build credit and what will give you the best annual percentage rate (APR) in the beginning and throughout the lifetime of the loan.

Traditional home loans are typically known as fixed rate mortgages (FRMs). The most popular FRM, a longer term mortgage, has the following characteristics:

* Payments are fixed throughout the term of the loan
* Are available from 15 to 40 years, in 5 year increments
* The shorter the loan term, the lower the interest rate
* The shorter the loan term, the less interest you will pay over the life of the loan
* The bulk of loan payments go to interest in the beginning of the loan
* There are penalties for early payoff on some FRMs - ask your lender

Included in FRMs is the balloon loan, a short-term, fixed-rate mortgage. The balloon loan has some advantages in that the interest is typically much lower and you have lower monthly payments than on a 15- to 40-year term loan. The terms are usually from 3 to 7 years, but you are required to pay the remaining balance in full at the end of the term.

If you are considering a balloon loan and think you will be keeping the home for a long period of time, obtain one with a refinancing option. Certain conditions will have to be met, but it allows you to convert the remaining balance of the loan into a longer fixed-rate mortgage at the end of the term without going through the buying process again.

With the caveat of the refinancing option, you don't have to go through another credit check or reapproval of the property. The interest assigned to the new loan will be at the current market rate at the time it is converted. A processing fee may be required when obtaining the new loan. You'll want to ask about this long before you agree to the balloon loan.

ARMs, on the other hand, provide you with a broad array of options, advantages and disadvantages. Similar to a balloon loan, the payments and interest rate are typically lower in the beginning of the ARM term. Periodic assessments are made throughout the lifetime of the loan, which can lower or raise your interest rate and monthly payment.

Keep in mind, interest rates typically are higher at the first assessment of the loan and often continue to rise. These kinds of loans, however, commonly have caps that put a ceiling on your maximum monthly payment that can be required of you throughout the lifetime of the loan. The excess will simply be added to the principal of your loan, which could extend the lifetime of your loan.

ARMs option ARMs are also available, can be very complex loans, so you'll want to understand the conditions of the loan, along with terminology applicable to the loan. Ask your lender prior to committing to an ARM about the advantages and disadvantages.

Generally, ARMS are best suited for those who are making an investment where rents are low and property values are high. This option allows you more cash flow. They also often benefit seasonal workers and those who own businesses where the revenues fluctuate.

Keep in mind, the interest rate on an ARM can adjust as soon as one month from the loan's inception, depending on the conditions of the loan. Some terminology to ask about and pay close attention to is:

* Lifetime cap limit
* Index
* Margin
* Periodic or adjustment cap limit
* Interest rate cap
* Loan recast
* Minimum payment factor

General advantages from a traditional mortgage are that you have significantly more flexible payment options and your monthly payments at the onset of your loan are much lower. One disadvantage is that if you only pay the minimum payment due monthly, your loan will recast at some point and your lender will recalculate your loan payments over the next 30 years based on your remaining balance. This could drastically raise your monthly loan payment.

Again, ask your lender as many questions as you can think of. Compare terms, advantages and disadvantages of each. Make sure you understand the terminology used and conditions prior to agreeing and signing to any loan.

Ki lives and works as a realtor in the Austin real estate market. There is comprehensive Austin home search on his website. His website also has detailed information on Austin real estate and a mortgage calculator widget.
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Nov. 1, 2009 - Austin is Festival Central

Austin is well known for the South By Southwest Music and Media Conference and Festival each spring and the Austin City Limits Music Festival each fall. But music isn't the only thing putting Austin on the map. Austin also hosts the Texas Book Festival and the Austin Film Festival and Conference every year.

Started in 1994, the Austin Film Festival is all about the creative process of screenwriting and film making. The annual film festival and conference held in October highlights local organizations and businesses that work in all elements of the film industry.

This year's festival features films starring actors like George Clooney and Meg Ryan. The conference and festival bring many big names from the film industry to Austin, but the event stays true the capital city's laid back feeling. There are no red carpets and little paparazzi at the eight day event.

The conference itself offers panels, lectures and roundtable discussion on all aspects of the film and screenwriting industry, and encourages budding film writers to take part. The festival is a series of screening of all types of films: shorts, documentaries, animation, independent and premieres. Unknowns in the film industry rub elbows with the bigwigs and many have had their work move into prominence due to this film festival.

The film festival is also a series of parties with different themes at many different downtown venues. Austin restaurants, bars, shops and hotels benefit from the festival patrons. The awards at this year's festival will go to industry greats like Ron Howard.

The Texas Book Festival, also going on this October in Austin, was started in 1995 by Laura Bush. The former first lady has always been a literacy advocate and started the ball rolling on the Texas festival to honor Texas writers and promote the love of reading.

The two-day event has the unique venue of the Texas State Capital buildings and grounds. Hopefully, the weather gods will smile down on Austin with more blue skies and sunny fall weather in the forecast for the last weekend in October. Nearly 50,000 people will fill the marbled halls and hallowed chambers of the state house to listen to lectures and panels. Other downtown venues also get involved, like the historical Paramount Theater and the Austin Children's Museum hosting special events for children's authors.

The festival not only celebrates literature, but also addresses some of the issues faced by the book industry. One of this year's lectures, "Are Books Dead?," addresses the future of books and the changing ways we will read them. This year will feature over 200 authors, like Margaret Atwood, Jane Smiley, Harold Evans, Gail Collins and Buzz Aldrin. The festival is free and open to the public, with lots of opportunites for book signings.

SXSW and ACL might bring the national camera crews and the big names in music, but they aren't the only festivals promoting the arts in this unique capital city.


Ki works, and lives, in Austin Texas. His website has thorough descriptions of Austin Texas real estate. It also has a map based search of the Austin MLS along with a blog covering news and events in Austin real estate.
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Nov. 1, 2009 - The Income Gap Widens

The Great Recession is not the great American equalizer after all. It's been widely reported recently that this recession hit middle and low income families the hardest, while the wealthy have continued to prosper. It may be chic to save and everyone brags about coupon clipping, but the idea that "we are all in this together" may not actually be the case.

According to the Associated Press, incomes have declined across all demographics, but at a greater percentage for middle and lower income groups. "Median income fell last year from $52,163 to $50,303, wiping out a decade's worth of gains to hit the lowest level since 1997." In fact, the gap between the rich and the poor has widened to the point that the wealthiest ten percent of Americans earned 11.4 times those below the poverty line earning $12,000 a year. Previously, the highest earning difference was 11.22 times higher in 2003.

The unemployment rate stands at a thirty year high of 9.7 and a great majority of those job losses have been lower income ones, particularly in construction and manufacturing. While wealthier Americans have had reductions in executive pay, far more of the middle and lower income earners have lost their jobs. This disparity between the rich and the poor is more pronounced in larger cities, like Atlanta, New York and Chicago.

The recession seems to be coming to a close with signs that the economy is finally growing. The Commerce Department reported that the economy shrank less than expected, with gross domestic product dipping just 0.7 percent from April to June, after dropping 6.4 percent in the first quarter of the year (AP). Measuring the value of all goods and services, the GPD is a good barometer of the health of the economy.

The better than anticipated numbers are attributed to businesses and consumers spending more than expected. The better news is largely credited to the government's $787 billion stimulus package and programs like Cash for Clunkers. What is not expected to improve anytime soon is the unemployment rate, which analysts believe will reach 10 percent by the end of the year.

As hiring in most sectors remains stagnate and layoffs continue, the gap between the haves and have-nots is likely to widen. Congress is considering ways to regulate executive pay and this along with The Great Recession is not the great American equalizer after all. It's been widely reported recently that this recession hit middle and low income families the hardest, while the wealthy have continued to prosper. It may be chic to save and everyone brags about coupon clipping, but the idea that "we are all in this together" may not actually be the case.

According to the Associated Press, incomes have declined across all demographics, but at a greater percentage for middle and lower income groups. "Median income fell last year from $52,163 to $50,303, wiping out a decade's worth of gains to hit the lowest level since 1997." In fact, the gap between the rich and the poor has widened to the point that the wealthiest ten percent of Americans earned 11.4 times those below the poverty line earning $12,000 a year.

The unemployment rate stands at a thirty year high of 9.7 and a great majority of those job losses have been lower income ones, particularly in construction and manufacturing. While wealthier Americans have had reductions in executive pay, far more of the middle and lower income earners have lost their jobs. This disparity between the rich and the poor is more pronounced in larger cities, like Atlanta, New York and Chicago.

The recession seems to be coming to a close with signs that the economy is finally growing. The Commerce Department reported that the economy shrank less than expected, with gross domestic product dipping just 0.7 percent from April to June, after dropping 6.4 percent in the first quarter of the year (AP). Measuring the value of all goods and services, the GPD is a good barometer of the health of the economy.

The better than anticipated numbers are attributed to businesses and consumers spending more than expected. The better news is largely credited to the government's $787 billion stimulus package and programs like Cash for Clunkers. What is not expected to improve anytime soon is the unemployment rate, which analysts believe will reach 10 percent by the end of the year.

As hiring in most sectors remains stagnate and layoffs continue, the gap between the haves and have-nots is likely to widen. Congress considering ways to regulate executive pay along with President Obama suggesting higher taxes on the wealthy as one the ways to pay for health care reform, the resentment between the two ends of the income spectrum may also increase. While the Great Recession is the worst state the economy has been in since the Great Depression, some Americans are faring better than others.


Ki's real estate business is based in Austin, Texas. His website gives comprehensive information on Austin real estate. His website provides future home buyers with a free search of homes in the Austin MLS along with a blog with statistics and commentary on Austin Texas real estate.
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Nov. 1, 2009 - Mortgage Rates Continue To Rise: Are Sub 5 Rates Gone Forever?

So are sub 5.0 rates gone forever? The short answer is probably yes. While rates might briefly fall below 5 in the next month for the most part the era of sub 5.0 rates is over. Mortgage rates rose for the third straight week. The thirty year rate rose from 5.00 to 5.03. The 15 year rate rose from 4.43 to 4.46. The 5 and 1 year rates rose from 4.40 to 4.42 and 4.54 to 4.57. Its interesting to note that the 1 year arm has had a higher rate than the 5 year arm for the last few weeks. Below are rates for the last few weeks.

Oct 29, 2009
30-yr 5.03 15-yr 4.46 5-yr ARM 4.42 1-yr ARM 4.57

Oct 22, 2009
30-yr 5.00 15-yr 4.43 5-yr ARM 4.40 1-yr ARM 4.54

Oct 15, 2009
30-yr 4.92 15-yr 4.37 5-yr ARM 4.38 1-yr ARM 4.60

Oct 08, 2009
30-yr 4.87 15-yr 4.33 5-yr ARM 4.35 1-yr ARM 4.53

Oct 01, 2009
30-yr 4.94 15-yr 4.36 5-yr ARM 4.42 1-yr ARM 4.49

Apr 02, 2009
30-yr 5.05 15-yr 5.13 5-yr ARM 5.00 1-yr ARM 4.78

The only two mortgage products that are interesting is the 30 year and the 15 year fixed rates. With 1 year rates higher than the 5 year arm they are obviously pointless. And with current rates low compared to historical mortgage rates the lower rates of the 5 year arm (compared to the 30 year rate) don't seem worth the risk. In addition to mortgage rates lets look at mortgage payments. Taking today's rates we can translate them into a payment for a 200k mortgage. We did the same thing with rates from October 15th (2 weeks ago) and April 2 (6 months ago).

Oct 29
30-yr $1077.31
15-yr $1525.9
5-yr ARM $1003.88
1-yr ARM $1021.7

Oct 15
30-yr $1063.88
15-yr $1516.73
5-yr ARM $999.16
1-yr ARM $1025.28

Apr 02
30-yr $1079.76
15-yr $1595.16
5-yr ARM $1073.64
1-yr ARM $1046.91

A mortgage payment is about $13 more than 2 weeks ago and about $2 less than it was six months ago.

So why are rates rising? Although its a weak recovery, the economy by most accounts is experiencing a recovery. In addition, the government has lowered the amount of mortgage backed securities it was buying which was keeping rates artifically low.

So what is our advice to people interested in buying a house? It might seem obvious but I would lock in now instead of waiting. Almost all signs point to mortgage rates rising over the next few months. The real question is will the strengthing real estate market be able to withstand higher rates? We will have to wait to find out.


Ki writes frequently about the mortgage industry and mortgage rates. He caters to the real estate market in Austin. His site www.escapesomewhere.com www.escapesomewhere.com has information on historical mortgage rates along with a free mortgage widget.
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Oct. 24, 2009 - Options for Avoiding Foreclosure

If you are having trouble keeping up with your mortgage payments, you're not alone. If you are three months or more behind in your mortgage payments, then you are one in an estimated 3 million or more who are currently in one state or another of default.

In this situation, however, what are your options for avoiding foreclosure?

Regardless of where you are right now with your mortgage payments, the most important thing you can do is to contact your lender when you first realize you are having problems. Never ignore communication from your loan servicer.

It is to the lender's advantage to work out a solution with you if at all possible. Discuss options with your lender. Initially, most lenders will not discuss options available until you complete and submit to them a workout packet. A workout packet includes a detailed letter as to how you arrived at your situation, an income and expense statement and other information specified by your lender.

Some workable options may be a loan modification, which modifies the payment and even sometimes lowers the interest rate of your existing mortgage. The intent is to make it more affordable for you to make the payments. Typically, the result is a mortgage payment at 31 percent or below your current total household income.

In the meantime, respond to all communication from your lender. Become familiar with your rights. Read your loan agreement and find out what steps are built into your home loan regarding default.

Research your state's foreclosure laws and the relative timeframes, since laws differ from state-to-state. Information should be available online; however, you may also want to contact your State Government Housing office directly for details. The Department of Housing and Urban Development (HUD) is a great point-of-contact for information.

HUD housing counseling agents are on-hand to assist in this type of situation. You may contact one by calling 1-800-569-4287. You may also access resources in your state via the HUD website.

Once you understand the timeframes and obtain all the information you can regarding your situation, you may want to find a good bankruptcy attorney just in case your lender does not provide you with a feasible option, or does not provide you with a feasible option in time to avoid foreclosure.

In the midst of all your activity to prevent foreclosure, a primary consideration should be to modify your spending. It's amazing how much you can trim when looking at alternatives to entertainment and other purchases.

In the case of job loss or other reasons for reduced income, families often find it difficult to stop the prior cycle of spending. Even if a previous family budget was kept, it's critical to restructure the budget according to the new net income and eliminate any unnecessary spending in order to modify spending habits.

If brands were important before, ditch the brand name and opt for generic or less expensive brands. Hold off on buying clothing and accessories. If you just have to purchase such items, make sure you build a minimal amount into your monthly budget for items that can easily blend into your existing wardrobe. Look for alternative entertainment, like $1.00 video rentals at a local Redbox.

There actually could be a silver lining to this cloud in working with your family members to reduce spending. With input from all family members, you might be surprised at the savings. In addition, if you opt for a weekly eat-in family theme night, instead of that expensive dinner and movie you were used to, a greater sense of bonding might be the result. Also, ask everyone the question, "Are there assets we have that could be sold?" Again, input from all family members could result in some unexpected revenue.

Another benefit found serendipitously through a layoff is that some who have lost jobs have found other opportunities they never would have looked for had they never been laid off.

Finally, stay away from foreclosure rescue companies and schemes. You don't need to spend money that could be used toward your mortgage in trying to save it. Note that all avenues necessary to avoid foreclosure cost you nothing if you access the appropriate resources, unless you have to go into bankruptcy to save it.

Ki lives, in central Texas and works in the Austin real estate market. His website brings a free search of Austin homes for sale to future homebuyers. There is detailed information about Austin real estate along with a mortgage widget.
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Oct. 24, 2009 - Austin Fall Festivities

The air isn't exactly crisp in Austin these days, but fall has found its way to central Texas all the same. Whether it's the University of Texas football fever or the Halloween decorations on every corner, autumn has a hold on Austin and fun festivities abound:

Oktoberfest Austin holds its first annual festival on October 24 in Waterloo Park. Bring two canned goods benefiting the Capital Area Food Bank and enjoy local bands, kids' entertainment and an arts and crafts market.

This is the 49th year for the annual "Salute to Sausage" celebrating German heritage with food and music. Wurstfest runs from October 30 to November 8 in Landa Park in New Braunfels. There are all kinds of fair-like attractions at this festival, including rides and live music.

Pumpkin Patches, or at least the kind that pick the pumpkins and bring them to the public for sale, abound in Austin. Some of them even offer far more than pumpkins. The Elgin Christmas Tree Farm offers a pumpkin patch and hay bale maze. Sweet Berry Farms in Marble Falls has a pumpkin patch, hayrides, and hayfield mazes for all ages, along with homemade ice cream and other treats.

Halloween can be celebrated all month long in Austin. Boo at the Zoo is a unique opportunity to see the zoo by flashlight on weekends in October. Wear a costume, bring a picnic and take a haunted train ride.

Spend an evening at the Austin Nature and Science Center for a Halloween Howl. See the spooky side of nature with all kinds of hands-on family fun. Check out the other Parks and Recreation events like a free haunted house and Halloween carnival.

There is the famous, or perhaps infamous, Halloween on Sixth Street with all sorts of rowdy revelers having scary fun. Shop for a costume at the famed Lucy in Disguise on South Congress before heading downtown to enjoy drink specials and live music.

The Mexican American Cultural Center celebrates Dia del los Muertes with food, music and family fun November 1. Come see the array of traditional altars honoring the dead and even create your own.

Most of the outdoor pool venues have closed for the season, but the cooler weather makes it a great time to take advantage of all the other outdoor fun Austin has to offer. Hike or bike the Barton Creek greenbelt. Walk the 100s of steps up to Mt. Bonnel and check out the view. Watch some college soccer or take in a high school football game. Stroll down South Congress Avenue or the Second Street district and see the one-of-kind shops and eateries. The fun fall festivities in the Austin area are practically endless.


Ki graduated from the University of Texas in Austin. He maintains a website with detailed information about Austin Texas real estate. The site allows future home buyers to search for homes in the Austin MLS. His blog has monthly statistics on Austin real estate.
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Oct. 24, 2009 - Mortgage Rates Start to Rise : Is Inflation Next

The 30 year rate rose again this week rising from 4.92 to 5.00. Now in the last two weeks 30 year mortgage rates have risen from 4.87 to 5.00. Most of the other major mortgage products rose as well. The 15 year rate rose from 4.37 to 4.43. Both the 5 year arm rising from 4.38 to 4.40 and the 1 year arm was the only product to fall moving from 4.60 to 4.54.

While this is not a huge jump the question is are we seeing the tip of the iceberg with rising rates? The expectation has been that rates would rise as the economy improves. While the economy is by no means doing well it seems to be improving from what we have seen in the last year. Additionally, the government has lowered its volume of buying mortgage backed securities. This has helped mortgage rates to rise in the last two weeks and led to speculation of further rises. Below are rates for the last few weeks.

Oct 22, 2009
30-yr 5.00 15-yr 4.43 5-yr ARM 4.40 1-yr ARM 4.54

Oct 15, 2009
30-yr 4.92 15-yr 4.37 5-yr ARM 4.38 1-yr ARM 4.60

Oct 08, 2009
30-yr 4.87 15-yr 4.33 5-yr ARM 4.35 1-yr ARM 4.53

Oct 01, 2009
30-yr 4.94 15-yr 4.36 5-yr ARM 4.42 1-yr ARM 4.49

Sep 24, 2009
30-yr 5.04 15-yr 4.46 5-yr ARM 4.51 1-yr ARM 4.52

Mar 26, 2009
30-yr 4.85 15-yr 4.58 5-yr ARM 4.96 1-yr ARM 4.85

In spite of the increases rates are still relatively low. They are lower than at any point before January 2009 and lower than they were just last month. In addition to looking at rates we also like to see mortgage payments. Using our mortgage calculator we translated rates from October 22, October 8 and March 26 into a mortgage payment for a 200k loan.

Oct 22
30-yr $1073.64
15-yr $1522.84
5-yr ARM $1001.52
1-yr ARM $1018.12

Oct 08
30-yr $1057.8
15-yr $1512.66
5-yr ARM $995.62
1-yr ARM $1016.93

Mar 26
30-yr $1055.38
15-yr $1538.17
5-yr ARM $1068.75
1-yr ARM $1055.38

As we can see again there is not a huge difference. Compared to 6 months ago a mortgage payment is only 1.73 percent higher ($18.26 more a month).

So what is going to happen moving forward? The fear of rates hitting 12 percent has probably lessoned. Basically if the economy quickly recovered the speculation was that inflation could spiral out of control. Since the economic recovery seems to be a somewhat slow process the expectation is that mortgage rates and inflation will rise but it's doubtful they will move above 10 percent.

That said if one is looking at buying its best to lock in rates now considering that rates are rising and the expectation is that they will probably be higher a month from now.


Ki has lived and worked in Austin, Texas for over 10 years. He has a comprehensive understanding of Austin Tx real estate. His site provides graphs of historical mortgage interest rates along with a free mortgage calculator.
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Oct. 24, 2009 - Why Recession Recovery Will Be Slow

Austin is one of 79 metro areas across the country to be officially out of the recession, according to Moody's. Although the state of Texas is still considered to be suffering the constraints of the recession, Austin and seven other Texas cities have been given the all clear. This determination was based on an index that included employment, housing starts and home prices.

In fact, the latest poll of economist says that at least 80 percent of them agree that the recession is over. Unfortunately that piece of good news may not mean whole lot as the American economic landscape looks completely different than it did two years ago. The survey by the National Association for Business Economics released recently said to expect a slow recovery. Here are some reasons the recession recovery may be slow:

Unemployment
There seems to be little doubt that the unemployment rate, which is currently 9.8 percent, will reach 10 percent by the first part of next year. Even with the number of new jobless claims down for the fourth week in the last five, layoffs continue. Federal Reserve Chairman Ben Bernanke has warned that unemployment is likely to remain above nine percent through 2010.

Consumer Spending
Worries over unemployment affect consumer spending habits, even of those Americans who have jobs and job security. The personal saving rate is up for the first time in two decades and the cautious spending that began during the height of the recession has not changed appreciably in recent months. For example, when gas prices hit the $4 per gallon mark in the summer of 2008, people significantly changed driving habits. The annual American Community Survey showed that the numbers of Americans commuting to work, a habit stared during the high gas prices, remains the highest number in more than a decade. People are generally not eating out as much or making as many big purchases. It remains to be seen if holiday spending this season will help revive the suffering retail sector.

Real Estate
The economists surveyed expect housing in 2010 to contribute to the overall growth of the economy for the first time since 2005. However, the census data shows that less people are moving these days, with population trends to the sunbelt states actually being reversed. Real Estate prices nationwide are down and the percentage of Americans owning homes dropped to 66.6 percent this year from the high of 67.3 percent in 2006.

Credit
Even with the Dow Jones industrial going over 10,000 and banks reporting billion dollars profits, credit remains tight. A recent report from the Federal Reserve shows that households have reduced their borrowing for the seventh straight month, while at the same times banks are lowering credit limits. Banks seem to be enemy number one when it comes to this recession, yet they have to play an integral part in the recovery. Until credit for both businesses and individuals starts flowing again, employment and housing is likely to remain stagnant.


Ki lives, and works, in Austin, Texas. His site provides potential homebuyers a free search of the Austin MLS. He also provides detailed information about Austin real estate on this site along with profiles of neighborhoods like Westminster Glen in central Austin.
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Oct. 16, 2009 - Control Home Building Costs - Here Are Some Tips & Tricks

Home building costs can often be a challenge to control when you've got so many variables in the building or remodeling project. You can avoid overages or, at least, keep them at a minimum if you are armed with some valuable advice.

When planning your build, pad your budget with a 15 percent Contingency Fund. This fund will enable you to pay for overages you have no control over, like unknowns behind walls and ceilings and problems found once excavation commences.

You may not be able to avoid all of them, but you can certainly keep overages under a certain amount of control if you consider the following tips and tricks.

Home Size, Style and Shape -

If you are building your dream home, these are three of the most significant factors that contribute to your bottom line - size, style and shape.

* As a rule, size your home in increments of two feet in order to reduce wasted material. In addition, industry experts advise that your home be built no deeper than 32 feet in order to eliminate the need for custom-made trusses. This will also reduce your expenses.

* Typically, the cost to build a multi-story home is less than building a ranch home with equivalent square footage. Multi-level homes have smaller roofs and foundations, and plumbing and ventilation are built more compact. Roofs and foundations can be quite expensive when building a ranch with equal square footage.

* The cost and need for labor and materials will increase the more corners and angles you build into the home, so you'll want to consider the shape when building your initial plan. A square or rectangular home costs less to build than homes with others shapes - e.g. L-shaped, round, octagonal, etc.

Before You Begin - Plan

* Plan your buildings costs. Take time to put your plan on paper.
* Itemize every activity you think will be involved in the project and every product you think you'll have to purchase to complete it.
* Visit home improvement stores and obtain pricing for all items you believe you'll need.
* Add all your projected expenses up and include the total in your budget.

Before You Sign - Specify

* Make sure you have an architectural plan or very specific drawing and measurements of your new build to eliminate as much gray area as possible.
* If you want specific products to be used in the build, state your requirements to the contractor and make sure that they are included in the contract for bid before signing.
* If you expect granite countertops, but only state high-end countertops, you can't expect your contractor to accommodate your request. You must be specific.
* Make sure language is included to reflect that all building permits will be obtained by your contractor.
* Make sure language is included in the contract that requires the contractor to be responsible for all costs associated with removal of demolition performed in the project.

Before Work Begins -

* If the contractor you use is reputable, he should obtain the appropriate permits with local authorities.
* Don't let the project proceed until you know that all permits have been obtained and are posted where required.

Contractor Change Orders - Beware

* This is the primary reason that projects experience overruns.
* A change order typically increases the cost of your build. If you agree to the change order and the associated expense, you are responsible to pay for it.
* If the change order is an expense incurred due to the contractor creating it, then you should not agree nor should you be held responsible for the cost - i.e., contractor accidentally tears down a wall not in the original bid or causes damage to your property while working the project.
* Be aware of your contract and the condition of your project along the way, so that you will immediately notice issues that come up for which the contractor should be responsible.
* Keep in mind that some change orders may require local officials to revisit the project to approve modifications.

Most Common Milestones for Overruns

Historically, there are two most common milestones when your building project will experience an overrun if building a new home or adding on a new room to your existing home.

Beginning of Project -

* When excavating and installing a well, if necessary, overruns are often experienced due to the terrain.
* If your contractor hits unusually rocky ground, it will take longer for him to excavate and will cost you more out-of-pocket.
* If drilling a well, it is not always known how deep it will be necessary to dig before finding water.

End of Project -

* Wrapping up the final touches to your countertops, cabinets, lighting, plumbing, flooring, electrical and other aspects to the project.
* Again, take time to shop around for all these items, price them, include them in the cost for your project, and deviate as little as possible.
* If you have excess from your Contingency Fund, you can always tap into it for extras at the end.

It's almost impossible to avert all overages in a building project; however, if you plan up front and keep your eyes open along the way, you could reduce and eliminate the most costly ones.

Ki lives and works in Austin Texas and works in Austin Texas real estate as a realtor and investor. He has a website to help buyers seamlessly perform an Austin home search online. He also writes a monthly blog covering Austin real estate with statistics and market updates.
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Oct. 16, 2009 - Making a Dent in Mountains of Debt

One of the reasons given over and over for the slow recovery from this recession is the amount of debt so many Americans are buried under. The soaring house values of just two years ago made people feel rich and the financial future looked promising. The future look so promising, in fact, that people spent well beyond their means. It is estimated that personal debt has more than doubled in the last ten years to an average $10,000 per American household.

The crash in home values and the sudden rise in layoffs nationwide left many Americans overextended on their home equity loans and credit cards.
With no easy means to pay off their personal debt, many people are turning to credit relief companies for help. While there are many reputable companies out there offering a wide range of debt elimination services, there are even more debt relief scams. Type "debt relief" into any search engine and a plethora of companies pop up, some of which are legitimate and others who will take a clients money and leave them further in debt. The Federal Trade Commission is investigating dozens of companies who have put people further in debt in the process of "helping" them.

There are several options when it comes to getting out of debt and it is a good idea to do research and know the lingo. There is a big difference between a debt settlement and debt consolidation, for example. A debt settlement company will help a consumer make a one-time payment to clear debts, usually for less than what is actually owed. However, these companies charge a hefty fee and while credit reports will show $0 balances after a debt settlement, it will also show any delinquency history.

Debt consolidation can be done with the help of a credit counselor or pursued without the help of a debt relief service. A legitimate credit counselor will sit down with a consumer and help him craft a realistic debt elimination program, usually giving a 3-5 year window for paying down all debt. Debt consolidation is the process of paying off higher interest balances, like those of a credit card, with a lower interest loan, typically from a bank. With the difficulties consumers are facing get loans these days, it may be helpful to go through a service to help with the consolidation process.

Bankruptcy is a route taken by more and more Americans, but really no one wins in this situation: creditors don't get paid and the consumer's credit is ruined. Bankruptcy is a legal process that clears all debts without having to pay them off, but of course, there are legal fees to be considered. It should be considered the last resort alternative. The best way to start digging out from debt is to take a realistic look at spending habits and set a reasonable budget. Before turning to a debt relief service it's a very good idea to check a company's reputation with both the Federal Trade Commission and the local Better Business Bureau.


Ki enjoys living in Austin Texas for the different local restaurants and the hill country. His site is devoted to Austin real estate. It encourages future buyers to search listings on the Austin MLS. His site also has general information on the Austin real estate market along with graphs showing historical mortgage rates.
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Oct. 16, 2009 - The Great Recession Has Been a Bumpy Ride

It is hard to believe just two years ago in October the Dow Jones industrial set a record high of 14,164. According to the Associated Press, just one year after that it was at 8,451 in mid October 2008. Today the Dow is around 9,800. Stocks have rallied recently on signs that retail sales are improving. The last two years have been a bumpy ride.

The AP recently broke down the economic numbers, putting into perspective just where the U.S. economy stands today. "The panic of last fall has been replaced by the resignation that the worst is over but it might be years before the economy booms again." It seems for every gain there is something else to put in the loss column. For example, while the stock market is steadily gaining ground, the total losses in the stock market from the peak of October 2007 to the bottom of March 2009 was a mind-boggling $11.2 trillion.

A positive sign is that after steadily declining for fourteen months, retail sales increased 2.7 percent in August. But the unemployment rate in October 2008 was 6.2 percent and today it is 9.8 percent. Consumer confidence, which is measured on a scale of 1 to 100, was at a record low of 25.3 last October and this month it is 53.1. To put these numbers in perspective, two years ago consumer confidence stood at 95.2.

Some oddly positive side effects of the Great Recession have been the increase in personal savings rate from 0.5 percent in 2005, when home prices were soaring, to 6.9 percent in May 2009. Also, credit card debt held by Americans last September was a staggering $975 billion. That number is down 8 percent now to $899 billion.

To put the housing numbers in perspective, 2005 was a record year with 7 million home resales. January 2009 the annual rate of home resales was 4.5 million, but rose to 5.1 million in August. On the other hand, the median price of homes sold in 2006 was a record high $245,000. The median price of homes sold last October was $213,000 and dipped to $195,000 in August.

Some other signs of the time: Starbucks launched an instant coffee product in September. PepsiCo Inc announced recently that it will continue to offer and develop products with price in mind, feeling customers will continue to be price-conscious even after the recession ends. Retailers will need to stay creative to entice shoppers this holiday season amid rising unemployment. Wall Street may be seeing a smoother path to recovery, but it's still a bumpy ride on Main Street.


Ki works in Austin real estate. He works to help buyers find the perfect property. His website provides general information on Austin real estate. It also allows buyers to search for homes in the Austin MLS along with providing a free mortgage calculator.
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Oct. 16, 2009 - Mortgage Rates Start to Rise

After falling for the last 6 weeks mortgage rates started to rise this week. The 30 year rate rose from 4.87 to 4.92. The 15 year mortgage rose from 4.33 to 4.37. Both arms rose as well with the 5 year arm rising from 4.35 to 4.38 and the 1 year arm rising from 4.53 to 4.60. Below are mortgage rates for the last several weeks along with mortgage rates from March 19, 2009.

Oct 15, 2009
30-yr 4.92 15-yr 4.37 5-yr ARM 4.38 1-yr ARM 4.60

Oct 08, 2009
30-yr 4.87 15-yr 4.33 5-yr ARM 4.35 1-yr ARM 4.53

Oct 01, 2009
30-yr 4.94 15-yr 4.36 5-yr ARM 4.42 1-yr ARM 4.49

Sep 24, 2009
30-yr 5.04 15-yr 4.46 5-yr ARM 4.51 1-yr ARM 4.52

Sep 17, 2009
30-yr 5.04 15-yr 4.47 5-yr ARM 4.51 1-yr ARM 4.58

Mar 19, 2009
30-yr 4.98 15-yr 4.61 5-yr ARM 4.98 1-yr ARM 4.91

Overall its not that interesting that rates moved up. Moving up .05 points is not that significant. For the last few months the speculation has been that rates are going to eventually move up. Additionally, the federal government has been pulling back on the amount of mortgage securities it was buying (which was pushing mortgage rates down). So the question is whether this weeks rise in mortgage rates was just normal volatility or the beginning of the steady rise in mortgage rates that some have been predicting. At this point it's an impossible question to answer for the most part we will have to wait and see.

In addition to rates it's also interesting to look at mortgage payments. We took today's rates and determined the mortgage payment on a 200k loan. We also did the same thing with rates from October 1st (2 weeks ago) and March 12, 2009 (6 months ago).

Oct 15
30-yr $1063.88
15-yr $1516.73
5-yr ARM $999.16
1-yr ARM $1025.28

Oct 01
30-yr $1066.32
15-yr $1515.71
5-yr ARM $1003.88
1-yr ARM $1012.18

Mar 12
30-yr $1077.31
15-yr $1544.33
5-yr ARM $1072.42
1-yr ARM $1049.33

Overall looking at mortgage rates/mortgage payments from 2 weeks and 6 months ago we are not seeing a lot of movement. Compared to March 12 (6 months ago) a mortgage payment on a 200k loan would only be $13.42 less a month or 1.24 percent less. By comparison if rates rise to 7 percent (historically about average) a mortgage payment would be 266.72 more a month or a rise of 25%. While a rise to 7 percent seems like a lot many experts are expecting rates to move up to 9 or 10 percent.

So what is our advice for people looking for a mortgage? First it's probably best to start looking for a mortgage early on in the home buying process. It's more difficult to get a loan and waiting to the last minute is not advisable. Additionally, it's probably advisable to lock in a rate earlier instead of later. While mortgage rates could fall its doubtful they could drop by much at this point. On the other hand it's possible that mortgage rates could move up dramatically. So there is more to lose than gain by waiting to lock in on a mortgage. If mortgage rates do start to rise dramatically it could deal a serious blow to the real estate recovery we are currently seeing in several markets around the country.


Ki works in Austin real estate. His site has different mortgage widgets to keep track of mortgage rates. His site escapesomewhere.com has information on Austin along with a blog focused on Austin Texas real estate
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