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.

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.

Mortgage Rates Fell yet again this week. The 30 year fell from 5.04 to 4.94. This marks the 5th week in a row where mortgage rates have either fallen or held steady. For the most part rates have been slowly falling. In fact this week accounts for half of the total fall in the last five weeks. So how does 4.94 look in a historical context. It is the lowest rate we have seen since May 28th. More importantly though it is lower than any rate we have seen prior to March 26, 2009 in the 40 years we have been compiling reliable data on average mortgage rates.

In addition to the 30 year rate the other major mortgage products fell as well. The 15 year fixed fell from 4.46 to 4.36. The 5 and 1 year arm fell from 4.51 to 4.42 and 4.52 to 4.49 respectively. Below are rates from the last few weeks.

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

Sep 10, 2009
30-yr 5.07 15-yr 4.50 5-yr ARM 4.51 1-yr ARM 4.64

Sep 03, 2009
30-yr 5.08 15-yr 4.54 5-yr ARM 4.59 1-yr ARM 4.62

Mar 05, 2009
30-yr 5.15 15-yr 4.72 5-yr ARM 5.08 1-yr ARM 4.86

So why are rates falling. The fed has been buying mortgage backed securities to keep rates low. But the expectation is that interest rates cannot stay this low forever. Historically rates are abnormally low and at some point they are going to start moving back up. One thing to watch is the government's buying of mortgage backed securities. To stop inflation from getting out of control the fed needs to stop buying securities once the economy starts improving and recently the fed has started to pull back on the volume of mortgage securities they are purchasing.

In addition to rates its also helpful to look at actual mortgage payments to provide perspective. We translated today's rates into a payment on a 200k mortgage. We also did the same thing with rates from September 17th and February 26th.

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

Sep 17
30-yr $1078.53
15-yr $1526.92
5-yr ARM $1014.55
1-yr ARM $1022.89

Feb 26
30-yr $1082.21
15-yr $1548.44
5-yr ARM $1080.98
1-yr ARM $1050.53

Looking at the 30 year rate a mortgage payment is pretty similar to 2 weeks ago and 6 months ago. A 200k mortgage 6 months ago would have been 1.46 percent less or $15.89 less a month.

So what is going to happen moving forward. I would expect rates to stay around 5 for the time being. As long as the government continues buying mortgage backed securities we should see rates at historically low levels. Once the market starts to improve rates will start to increase. If the government is careful and avoids inflation rates should likely rise to 6-8 percent. If the government loses control of inflation we could see rates move up into the double digits.

Ki studied at UT. He hosts a website with a graphical Austin home search. His site also has a graph showing mortgage rate trends along with several mortgage widgets.

Mortgage rates fell this week to the lowest point since May 28, 2009. Whether May 28, 2009 is the summer is open to some debate. The summer solstice usually is considered the technical beginning of summer which occurred on June 21st this year. Some consider Memorial Day the beginning of summer which was May 25th. Either way this is the lowest we have seen the 30 year mortgage rate in the last 3 months.

The question of course is why mortgage rates are falling. Generally once the economy starts improving interest rates should rise. I think what has happened is that while the actual economy has improved the expectations about the economy have fallen. During the last 2 months people thought the economy might experience a V shaped recovery. Basically once the economy turned around it would recover quickly.

But since that time more people are now expecting a U shaped recovery. Basically the economy is going to recover but it's going to occur more slowly. On the positive side these lower expectations could be lowering mortgage rates. Here are mortgage rates for the last few weeks.

Aug 20, 2009
30-yr 5.12 15-yr 4.56 5-yr ARM 4.57 1-yr ARM 4.69

Aug 13, 2009
30-yr 5.29 15-yr 4.68 5-yr ARM 4.75 1-yr ARM 4.72

Aug 06, 2009
30-yr 5.22 15-yr 4.63 5-yr ARM 4.73 1-yr ARM 4.78

Jul 30, 2009
30-yr 5.25 15-yr 4.69 5-yr ARM 4.75 1-yr ARM 4.80

Jul 23, 2009
30-yr 5.20 15-yr 4.68 5-yr ARM 4.74 1-yr ARM 4.77

As we can see for the last few weeks the 30 year mortgage rate has been hovering from 5.20 to 5.29 until this week when it abruptly fell to 5.12. In addition to rates we like to look at mortgage payments. We took today's rates and translated them into a mortgage payment for a 200k loan. We also did the same thing with rates from August 6 (2 weeks ago) and rates from January 15 (6 months ago).

Aug 20
30-yr $1088.35
15-yr $1536.12
5-yr ARM $1021.7
1-yr ARM $1036.07

Aug 06
30-yr $1100.69
15-yr $1543.3
5-yr ARM $1040.88
1-yr ARM $1046.91

Jan 15
30-yr $1068.75
15-yr $1545.36
5-yr ARM $1104.4
1-yr ARM $1060.23

As we can see there is some savings compared to 2 weeks but nothing too substantial. Compared to 6 months ago a mortgage payment would be 1.83 percent more. So basically we are seeing rates and mortgage payments slightly higher than 6 months ago and slightly lower than the last few months.

What we are going to see moving forward depends on the economy. If we experience a V shaped recovery we should expect mortgage rates to move up quickly. This is because the massive amount of money the US government has poured into the economy during the recession should lead to inflation when the economy recovers. But if the economy experiences a U shaped recovery and continues to lurk around in the doldrums we should see low interest rates for the next few months.


Ki lives in central Texas and works in the real estate market in Austin. His website escapesomewhere provides a mortgage rate widget along with a mortgage calculator widget.

From sea to shining sea, lenders struggle with costly mortgage fraud. Although, the fraud itself is not new, a recent FBI report reveals that the numbers are mounting and the methods used by scammers are becoming more, well, creative.

From 2007 to 2008, the FBI's annual report showed that the industry experienced an increase of more than 83.4 percent in actual mortgage fraud dollars. Last year mortgage fraud cost lenders in excess of $1.4 billion in liability, says the FBI report, and higher figures are expected for the 2009 fiscal year. Just through June of 2009, fraud figures exceeded the previous year during the same time period by around $208 million.

There were over 63,000 incidents reported by lenders regarding mortgage fraud in 2008, which was 33 percent more than reported in 2007. Increased reported incidents are partly attributed to more intense scrutiny of borrower details. Reporting inflated income in order to buy a larger home, or applying for modification under the pretense of a false job loss, have been identified as increased contributors to fraud more recently.

In the report, the FBI attributes much of the fraud to market insiders, which includes mortgage brokers, real estate agents and brokers, lenders, property appraisers, title companies, underwriters, accountants and others. Stating that insiders are attracted by the allure of low-risk, high-yield returns, the report does not expect the numbers of those involved in fraud to diminish. Due to the complexity of the mortgage process, industry insiders find ways to make a quick buck without drawing immediate attention.

Tighter lender requirements that are making it more difficult to obtain a mortgage are a contributor to the strained industry. In addition, many in the mortgage industry are no longer experiencing the benefits of the long gone real estate boom and turn to fraudulent methods to fill the gap in income.

Along with traditional methods, other major targets expected to be pursued by fraudsters are minorities and seniors struggling with foreclosure, along with federal economic stimulus programs. State-wide incidents in Florida reveal increased numbers of Hispanics being defrauded by Hispanics operating fraudulent companies under the pretense of financial and foreclosure assistance.

Federal programs operating under the Emergency Economic Stabilization Act (EESA) and the Housing and Economic Recovery Act (HERA) have opened the door to additional fraud opportunities, and are expected to become new targets for fraudsters.

California has revealed incidents of mortgage fraud perpetrated by organized crime and gang members. Along with new fraud methods, traditional modes are expected to increase and will be more closely monitored by the mortgage industry and law enforcement as communication methods become more enhanced.

The FBI is bracing itself for record high mortgage fraud. In attempts to get a handle on the mortgage fraud epidemic, the federal branch created the National Mortgage Fraud Team (NMFT). The FBI will use the team to further continue to partner and provide valuable information to the mortgage industry and law enforcement in order to capture and deter mortgage fraud perpetrators.

Ki provides a free search of Austin MLS listings on his website as a service provided for those curious about austin real estate. He has lived in Austin for over a decade. His site provides updated information on Austin real estate and mortgage rate trends

Mortgage Interest Rates Historical Mortgage Rates

After several weeks of staying relatively flat mortgage interest rates jumped up this week. 30 Year mortgage went from 6.09 to 6.32. 15 Year Mortgage moved from 5.65 to 5.93. 5 Year rates went from 5.51 to 5.70. The only rate that was somewhat stable was 1 Year Arms which went up from 5.06 to 5.09. Two weeks ago we predicted that rates would increase over the summer and they seem to be doing exactly that.

June 12,2008
30-yr 6.32 15-yr 5.93 5-yr ARM 5.70 1-yr ARM 5.09

June 5,2008
30-yr 6.09 15-yr 5.65 5-yr ARM 5.51 1-yr ARM 5.06

May 29,2008
30-yr 6.08 15-yr 5.66 5-yr ARM 5.62 1-yr ARM 5.22

May 22,2008
30-yr 5.98 15-yr 5.55 5-yr ARM 5.61 1-yr ARM 5.24

May 15, 2008
30-yr 6.01 15-yr 5.60 5-yr ARM 5.57 1-yr ARM 5.18

May 8, 2008
30-yr 6.05 15-yr 5.60 5-yr ARM 5.67 1-yr ARM 5.29

Using out free mortgage calculator lets see what the rate increase mean for the payments on a 200k mortgage. We calculated out the mortgage payments based on today's mortgage interest rates and rates a week and a month ago.

June 12th
30-yr $1240.55
15-yr $1680.15
5-yr ARM $1160.80
1-yr ARM $1084.67

June 5th
30-yr $1210.69
15-yr $1650.11
5-yr ARM $1136.83
1-yr ARM $1080.98

May 8th, 2008
30-yr $1205.53
15-yr $1644.79
5-yr ARM $1157.00
1-yr ARM $1109.36

So for a 30 Year Mortgage on a 200k loan the mortgage payment went up about $30 or about 2.5 percent. The mortgage on a 15 Year mortgage also went up about $30. What is weird is rates on 1 Year ARMs stayed about the same and are actually down from a month ago. This makes no sense. Banks are dealing with foreclosures that are mostly coming from borrowers that got 5 and 1 Year ARMs. Basically when the ARMs reset borrowers are frequently unable to make the higher payments and wide up facing foreclosure. One would think banks would be discouraging these high risk loans. I would like to think the banks know something I don't. But looking at their foolish behavior over the last few years (giving loans to everyone that walked in the door from 2004-2006) its a distinct possibility they are just plain foolish. So again this week 1 Year ARMs look attractive. Just remember in a year your rate and mortgage could be higher so it would be wise to have some cash on the side to pay a potentially higher mortgage. And I would expect rates to be higher one year from today.

So what would I expect to happen over the rest of the summer. First off I don't see rates going down. The FED has given numerous signals they don't plan to lower rates. Will rates continue to go up? I am not sure. I expected rates to creep up over the next month instead of jumping up this month. So I hope rates stay relatively flat but they could go higher over the next month.

Escapeso Realty operates in the Austin real estate market. They work with investors interested in Austin commercial real estate and provide a search of the Austin MLS on their website.

Mortgage Interest Rates Mortgage Rate Trends

Rates on 15 and 30 Year Fixed loans were pretty much stable this week. Rates on 5 and 1 year ARMs both fell. With 1 Year ARMs falling from 5.22 to 5.06. This is the lowest 1 Year Arms have been since early March. Its a little wierd considering banks are losing a lot of money on ARMs from people going into foreclosure when their ARMs reset. So one would think that banks would be discouraging people from getting 5 and 1 year ARMs. But instead with a full point difference between 30 Year Fixed and One Year Arms they are doing exactly the opposite.

June 5,2008
30-yr 6.09 15-yr 5.65 5-yr ARM 5.51 1-yr ARM 5.06

May 29,2008
30-yr 6.08 15-yr 5.66 5-yr ARM 5.62 1-yr ARM 5.22

May 22,2008
30-yr 5.98 15-yr 5.55 5-yr ARM 5.61 1-yr ARM 5.24

May 15, 2008
30-yr 6.01 15-yr 5.60 5-yr ARM 5.57 1-yr ARM 5.18

May 8, 2008
30-yr 6.05 15-yr 5.60 5-yr ARM 5.67 1-yr ARM 5.29

May 1, 2008
30-yr 6.06 15-yr 5.59 5-yr ARM 5.73 1-yr ARM 5.29

Using our mortgage calculator lets run some numbers and look at what the rates would translate into today and a month ago.

June 5th
30-yr $1210.69
15-yr $1650.11
5-yr ARM $1136.83
1-yr ARM $1080.98

May 8th, 2008
30-yr $1205.53
15-yr $1711.46
5-yr ARM $1157
1-yr ARM $1109.36

A few weeks ago I wrote about how it made sense to get a 30 Year Fixed over a 5 Year ARM because there was not a big difference in the monthly mortgage payment you would be facing . As of today that is no longer true. On a 200k loan there is a $73.86 difference in the monthly mortgage payment between a 30 Year Fixed and a 5 Year ARM. I still don't like ARM's because your mortgage payment can reset when you are not ready for it. For instance I have heard stories of people losing their jobs a week before their mortgage interest rates resets to a higher number. But with the large difference in today's rates makes it hard to ignore the cost savings one would get with a 5 Year ARM. If you consider getting an ARM I would advise saving the difference of $73.86 a month and setting that aside for when the ARM resets. If you sell before your ARM resets you can just consider that savings a bonus.

Escapeso Realty is a small independent brokerage covering Austin Texas real estate. They have a graphical Austin MLS search and a blog with market updates on Austin real estate.