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Recession Pt. II: How Could It Effect Housing?

Thursday, August 25th, 2011

Here’s something amazing: interest rates on U.S. Treasury bonds have gotten so low, so cheap, that if you invest in them (widely considered the safest investment you can make), there’s a good chance you’ll end up earning less in interest than the rate of inflation. On a five year bond, for example, you’d lose .75 percent.

In other words, you’re choosing to lose a little bit of money, rather than risking losing a lot of money. You’d be better off sticking your money in a giant piggy bank under a humongous mattress inside of enormous safe).

So why are investors still flocking to U.S. bonds? Well, as we mentioned last week, even a U.S. downgraded by a credit ratings agency is still truly one of the safest investments you can make. We have all the fundamentals for a robust economy — unmatched natural resources, (comparatively) effective governance, and rule of law that is (comparatively) strong. And despite how close we came to defaulting on our debts for self-inflicted reasons, no one really thinks we’ll be unable to pay debts for economic reasons anytime soon. We’re safe.

Plus, foreign countries simply love having dollars, even when it’s a little bit shaky. Global trade relies on a dominant “reserve” currency, and there’s simply nothing else out there to replace it.

But there’s another explanation. According to Bill Gross of PIMCO, the world’s largest bond fund: “They certainly reflect, in terms of their yields, not only a potential for a recession but the almost high probability of recession and the result of lowering inflation.”

So there you go. People are investing in treasuries both because the American economy is awesome, as well as because people think the American economy is about to tank again.

Only in America.

Regardless, it’s good for potential homebuyers. Here’s why:

If we slide back into a recession, the effect on housing won’t be the same. The housing market is holding the recovery back, yes. But it’s not like the housing bubble has re-inflated and is about to pop again. Prices are already about as low as they can get, and they’re going to stay low for a little bit longer. That’s not helping the economy, but it’s not the same as in 2007 and 2008, when so many homeowners saw the value of their homes plummet so precipitously almost overnight.

In fact, one of the most encouraging sign we have for the medium-term outlook in America is that — slowly but surely — the housing mess is sorting itself out. Americans are paying down debts, and the biggest drag on the economic recovery is slowly going away.

For potential home-buyers, this means historically low home prices, historically low Texas home purchase interest rates, and historically low home refinance rates. And here at Texas Lending, we’re proud to boast the lowest Texas home interest rates in the state.

Tags: Home Loans, homebuying advice, housing crisis, housing market, low rates, mortgages, recession, refinance
Posted in Mortgage News | No Comments »

Home Interest Rate Limbo: How Low Can They Go?

Tuesday, August 16th, 2011

What do you call it when something hits rock bottom — and then keeps right on dropping?

Home interest rates continued to intrepidly explore the geologic depths of the housing market this week — both in Texas and across the country. As result, it’s simply cheaper now than it’s been in several decades to buy a home in Texas.

According to real estate database Zillow.com:

With this week’s Fannie/Freddie downgrade, stock market tumble, and the Fed’s promise to keep interest rates low until 2013, many have been left wondering what the impact will be on the housing market and, more specifically, how mortgage rates will change. As it turns out, Zillow Mortgage Marketplace shows that today’s 30-year fixed mortgage rate has taken a fall from Tuesday’s 9-month low of 4.14 percent to a new all-time low of 3.92 percent. This rate represents the first time the rate has dropped below 4 percent as well as the lowest rate recorded since Zillow Mortgage Marketplacelaunched in April 2008. Prior to today, the lowest rate recorded on Zillow Mortgage Marketplace was 4.07 percent on Nov. 9, 2010.

Or, as economics blog Modeled Behavior put it: “If I wanted to be a homeowner, I’d strongly consider buying right now.”

As we mentioned during the debt ceiling negotiations, there was concern that a credit downgrade would cause U.S. treasury bond rates jump, which would make mortgage rates jump as well. But, as we mentioned last week, when credit rating agency Standard & Poors actually did downgrade the U.S. treasuries, a remarkable thing happened — the buying of U.S. bonds only accelerated. In other words, even a congressionally dysfunctional U.S. is still one of the safest investments anywhere in the world.

Eventually rates are going to go back up. But, for now, it’s still a historically great time to buy — especially if you don’t need to sell a home in order to do so. Here at Texas Lending, we boast some of the lowest Texas home purchase loan interest rates and Texas home refinance rates in the state. 30-year fixed rates have hit 3.875 percent. 15-year fixed rates have hit 3.25 percent.

We’re eager to make it easy for folks to start buying again. If you’re in position to buy a home, don’t wait until rates and prices rise again.

Tags: Fannie Mae, Freddie Mac, Home Loans, home purchase, homebuying advice, housing market, recession, refinance
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Will the S&P Downgrade Affect the Texas Housing Market?

Monday, August 8th, 2011

Credit ratings agency Standard and Poor’s (S&P) followed through on its warnings and downgraded U.S. treasury bonds from AAA to AA-plus. Depending on how you look at the move, its impact on local housing markets could either be real or overblown.

Let’s take a look at why a single ratings firm downgrade could or could not be a problem for the Texas housing market (or, for an inside look at how ratings firms rate a nation’s credit, check out Planet Money’s fantastic podcast about the subject):

No biggie:

America is still an investment safe haven.

U.S. treasury bonds are still just about the safest investment you can make, despite the big economic issues facing our country. Europe is on the brink of collapse. Despite China’s enormous growth, it faces some severe structural issues that will likely keep it from ever becoming an America-esque superpower. Meanwhile, America still has the best combination of fundamentals needed for growth, like natural resources, the ability to collect tax revenues, military protection of our shipping lanes and economic interests, etc. Housing factors like interest rates will likely reflect this.

In fact, after Japan’s credit rating was downgraded in 2001, its interest rates actually sank. True to form, U.S. treasury interest rates also fell this morning. S&P doesn’t have any insider knowledge about the U.S. economy, so they’re essentially making the same judgement calls as individual investors who—according to today’s news—seem eager to keep buying.

Bad News Ahead:

It’s a blow to consumer confidence.

In aggregate, markets are largely irrational things. Consumers will usually make decisions based on their own desires and fears. So even if America has strong fundamentals, if people don’t feel very confident about the future, they won’t buy things like clothes, cars, and (yes) homes. A prominent ratings firm like S&P can fuel the fire of uncertainty.

Furthermore, folks with large stock portfolios have been slammed over the past few weeks, which means there will be both less of a mood to buy homes and less money to do so.

Pension rules punish.

Some prominent pension funds are required to hold only AAA-rated corporate and treasury securities, and will have to sell their U.S. bonds as result of the downgrade. This withdraws liquidity from our markets, and could make it more expensive for the government to borrow funds.

The downgrade isn’t entirely groundless.

Even if we’re better off than most countries around the globe, we’re still facing some steep challenges. There’s no easy way to slow the growth of healthcare costs — the main driver of our long-term deficits. Employment is dragging its feet. And, right or wrong, the fact that a sizable faction of Congress was willing to blow through the debt ceiling and begin defaulting on some of our obligations should rightly make U.S. bonds seen as not entirely risk-free.

Here at Texas Lending, we’ll make it as easy as possible for Texans to get the loans they need when it’s time to buy. Between our Texas home purchase loans, Texas home equity loans, and Texas home refinance loans, we can find a loan solution perfect for your family’s unique needs.

Let us know what you think — will the S&P downgrade impact the local housing market?

Tags: home equity, homebuying advice, housing crisis, housing market, recession, refinance, s&p
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Get the Cash You Need to Invest in Home Savings

Monday, August 1st, 2011

Last week, we talked about how lots of Dallas homeowners are choosing to reinvest in their homes, instead of trying to make a move during a slumping housing market.

Here’s the strategy: Invest now in value-boosting home upgrades like a new kitchen, patio, or pool. Sell later when the housing market recovers. Reap the benefits.

But there’s another cost-effective reason to invest in a home remodel: Green home renovations are a great way to boost long-term value, while lowering your month-to-month energy bills as well.

Utility bills soar during scorching summer like this one, but a green retrofit can help bring them back to earth. For example, consider the savings reaped by one of America’s famous buildings — as recently pointed out in an article by former president Bill Clinton:

Just look at the Empire State Building—I can see it from my office window. Our climate-change people worked on their retrofit project. They cleared off a whole floor for a small factory to change the heating and air conditioning, put in new lighting and insulation, and cut energy-efficient glass for the windows. Johnson Controls, the energy-service company overseeing the project, guaranteed the building owners their electricity usage would go down 38 percent—a massive saving, which will enable the costs of the retrofits to be recovered through lower utility bills in less than five years.

Of course, you probably won’t see the same savings as a 102-story tower built in 1931. But a green retrofit is still an excellent way to lower the long-term month-to-month costs of living in your home — and some retrofits could eventually end up paying for themselves.

You need cash to do this. At Texas Lending, we’re proud to offer the best rates on Dallas home equity loans and Dallas home refinance loans available anywhere. Get the cash you need to invest in your family’s future.

Tags: energy efficient, home equity, home improvement, homebuying advice, housing crisis, housing market, recession, refinance
Posted in Home Improvement | No Comments »

Home Remodels Continue to Boom: Your Options

Monday, July 25th, 2011

Home sales continue to slump, but home remodels are soaring. Coincidence? Contradiction? Let’s take a look.

According to The Atlantic:

New home sales remain near their historical lows. Americans have been building so few homes for so long that some people are wondering if a housing shortage could result at some point in the future. The unusually weak demand for new homes serves as part of the reason for why millions of construction workers are unemployed. It could be worse, however. Some have found work remodeling homes instead of building new structures. In fact, remodeling hit an new high in May.

So it’s good news for the construction industry, and good news for the broader economy if thousands of workers around Texas get put back to work on these types of projects. But it also highlights several different ways homeowners are trying to make the most of a slumping economy:

As we’ve mentioned before, many folks in Texas would like to sell their homes for various reasons, but are in financial position to wait until the housing market improves before doing so. In the meantime, however, rather than passively waiting for the housing slump to end, they’re adding value to their homes through projects like home remodels and renovations. That way, when the market does improve, they’ll be in position to see a much greater return on their original home investment (plus those years waiting to sell will be spent in a nicer home).
Similarly, while families desiring an extra bedroom or nicer living arrangements would normally just move to a nicer neighborhood nearby, remodeling offers a way to improve their living situations and add space to their home without having to go through the full hassle of selling, buying, and moving.
There’s still a glut of foreclosed-upon homes available in Texas, so bargains abound for folks who are in position to buy. Unfortunately, foreclosed houses aren’t always kept in the best shape, so a little bit of work is often required to turn them into homes. Still, the remodel-foreclosure combination often ends up being cheaper than buying a home at full-price, and it gives the new buyers a chance to customize parts of the home to their tastes.

At Texas Lending, we offer multiple products that can get you the cash needed to invest in value-boosting home upgrade projects, including home equity loans and home refinance loans. We also offer some of the most favorable home purchase loans available anywhere in the state, should you look into buying a foreclosed home.

Tags: home purchase, homebuying advice, housing crisis, housing market, new homes, remodel
Posted in Home Improvement, Home Loans | No Comments »

Deal or No Deal: Home Interest Rates Possibilities

Monday, July 18th, 2011

Without getting into politics, let’s take a look at how the success or failure of the debt ceiling negotiations these next couple weeks could affect the Dallas housing market. For better or for worse, what happens in Washington effects everyone — especially, as we detailed a few weeks ago, when it comes to Texas home interest rates.

Here’s how three potential scenarios could effect the landscape here in Texas:

1. Deal!

Currently, Texas is witnessing a prolonged buyer-friendly market. Unsold inventories are high, keeping prices low. Land is abundant. Texas home interest rates are firmly anchored to the rock bottom. For folks in position to buy, there truly never has been a much better time to buy (no cliche). And here at Texas Lending, we offer some of the lowest rates for Texas home purchase loan, Texas home refinance loans, and Texas home equity loans in the state.

Naturally, if a debt-ceiling/reduction deal is passed, this favorable homebuying environment should last a while longer.

Over the long-term, interest rates will eventually need to rise. And depending on how successful the deal is at reshaping the debt picture, we could end up back in the same sort of budget impasse a year or two from now (remember—the debt ceiling was raised seven times during the Bush Administration, so these debates can happen pretty regularly).

But, in the short-term, this historically buyers-friendly market will hang around just a little bit longer.

2a. No deal. Mo’ recession.

Depending on who you believe, a failure to reach a deal would either lead to economic catastrophe or, well, it wouldn’t. Let’s look at the worst-case scenario first:

As we explained a few weeks ago, home interest rates are basically tied to U.S. treasury rates, so the effects of a Washington default will trickle down to states like Texas as well. Washington Post domestic policy blogger Ezra Klein explains:

It’s easy to understand why the government will have more trouble borrowing if it fails to pay its debts, or even has a difficult time paying its debts. It’s a bit harder to see why ordinary Americans, the city of Pittsburgh, hospitals in Iowa, and medium-sized corporations will have more trouble borrowing. But they will. [...]

Much of the debt in the American economy, and in fact globally, is “benchmarked” to Treasury debt. When your bank quotes you a mortgage rate, the calculation begins with the rate on 10-year treasuries and then adds premiums for various types of risk specific to you and your area on top of that. “There’s a whole credit structure,” says Pete Davis, president of Davis Capital Investment Ideas. “Think of it as roads and bridges, but it’s finance, it’s all connected, and it’s all on top of treasuries. Your CD at a bank, your credit card interest rates, your car loans, your mortgages — that’s all built on Treasury rates. So when you shake the basis of it, everything on top of it shakes, too.”

This is how a default gets into the rest of the economy: It takes everything the financial markets thought they could know and rely on and upends it. It then shuts off credit, or makes it prohibitively expensive, for nearly every participant in the economy, from states and cities to hospitals and universities to homebuyers and credit-card applicants. That, in turn, freezes all of their activity, which destabilizes everyone who relies on them, which then destabilizes financial markets further, and so on.

There’s some history of this happening: In 1979, a combination of debt limit failure and a breakdown of the Treasury’s check-printing machines (!!!) alone led to a 0.6 point increase in interest rates ($50 to 100 billion per year in today’s terms) that lasted several years. And rating agencies like Moody’s have already put U.S. debt on review for a possible downgrading from AAA status — which alone could make interest rates spike.

In other words, things could get complicated quickly, leading home interest rates to rise.

2b. No deal. No problem.

Of course, many powerful voices in Washington contend that the fear about default is being overblown for political reasons, and that short-term default pain is bearable and necessary in order to put us on sound economic footing again.

If true, then the lucrative Texas home-buying environment should continue — especially while the Fed does everything it can to keep rates low to limit the impact of default on unemployment. Add in a healthier long-term debt outlook, and boosted investor confidence could spur the overall economy and housing market to more rapid improvement. Furthermore, that short-term pain (incurred while getting to such sound footing) could lead to a more sluggish recovery — counter-intuitively keeping the housing market ripe for home-buying.

More likely, however, is that the initial market turbulence will make borrowing at least temporarily difficult while the default sorts itself out. Lending tends to dry up during periods of uncertainty — even if the warnings about default turn out to be overblown.

So if you’re in position to pull the trigger on a home soon, it might be prudent to do so before we hit those rough waters. Apply online today to get the process started.

Tags: home equity, Home Loans, home purchase, homebuying advice, housing crisis, housing market, refinance
Posted in Mortgage News | No Comments »

Bang For Your Buck? Texas Wins Cost of Living Again

Monday, July 11th, 2011

Another day, another study adding statistical data to a fact most folks here in Dallas-Ft. Worth already know: Texas is a great place to live.

This time, it’s all about value. When it comes to cost of living, according to DailyFinance, southern states simply offer the most bang for your buck:

Everyday expenses have a direct effect on the price of doing business, which is why we rank the cost of living for each state in CNBC’s Top States for Business.

Kentucky tops our list with 50 out of the 50-point total for this category. Moving up from 3rd place last year, the state boasts the lowest costs in the nation for groceries and health care, with extremely competitive costs for housing, transportation and utilities — all three part of the basic criteria used for this ranking.

[...] They are followed very closely by Arkansas (4/3) and Texas (5/8). The Lone Star state gained ground this year, jumping up three spots, thanks to low-cost groceries and gasoline.

Plentiful land. Plentiful employment. Cheap cost of living. Each of these factors make our state attractive to both businesses and families, and folks across America are taking notice of the landscape here.

So if you’re considering moving into our fine state, here’s what the home ownership picture looks like:

Currently, in the wake of the financial crisis, there’s still a huge selection of houses available, meaning bargains are ready to be found all over Texas. In fact, it’s a historically buyer-friendly market, especially for folks who aren’t struggling to sell a home before buying. At Texas Lending, we offer the lowest Texas home purchase interest rates.

If your financial picture is more complicated, we also offer a diverse range of other home loan options, including home equity loans and home refinance loans.

Give one of our Texas home loan specialists a call for more information. We’re eager to welcome our new neighbors with home loans tailored specifically to their desires and needs.

Tags: home equity, home purchase, homebuying advice, housing market, refinance
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Banks Bailing on Reverse Mortgage Market. We’re Not.

Tuesday, July 5th, 2011

Let’s say you’ve spent years and years building up equity in your home, and steadily seen its value rise. But suddenly, in the wake of the recession, you’re facing a cash-strapped retirement. Normally, a reverse mortgage would be a great way to turn that equity into a stress-free future.

The big banks can no longer help you do that. We can.

According to Aol’s DailyFinance:

Last week, Wells Fargo, the biggest name in the nation’s reverse mortgage market, announced that it was getting out of the business, citing concerns that housing prices could continue to erode further. That move followed in the footsteps of No. 2 reverse mortgage player Bank of America, which exited the business earlier this year. Combined, the two banking behemoths represented 43.6% of the reverse mortgage market, based on a 12-month trailing period ending in April, according to industry researcher Reverse Market Insight.

If you didn’t catch that, the two largest banks in the reverse mortgage market (43.6 percent of the market, in fact) just aren’t in the mood to ride out the unstable market any longer. To that we say: “Surfs up!” We’ll stick with you on this bumpy wave until we’re all on calmer seas again. Here’s how one of our Texas reverse mortgages can help:

For elderly homeowners over the age of 62, reverse mortgages are a great way to access the equity they’ve spent decades building up in their homes. Basically, we “buy” the home from the homeowner while letting them live in it as long as they’d like. They only pay insurance, property taxes, and general upkeep (some upfront fees also apply). This gives the homeowner a hefty sum of cash and the chance to enjoy their golden years without financial stress.

After the homeowner either passes away or simply moves out, we sell the house in order to make up the difference. If the market has recovered and the home sells for more than it was worth when the reverse mortgage was purchased, remaining funds will go to homeowner’s heirs.

In other words, it’s an innovative way to make what’s probably your biggest asset — your home — carry you through retirement. Contact one of our Dallas reverse mortgage specialists for more information.

Tags: Home Loans, homebuying advice, housing crisis, housing market, recession, reverse mortgages
Posted in Reverse Mortgages | No Comments »

Feds Sticking With Low Home Loan Interest Rates: How It Affects You

Monday, June 27th, 2011

It looks like historically low home interest rates will be here for the foreseeable future — great news for folks in Texas looking to buy a new home.

According to AdvisorOne:

Federal Reserve policymakers are expected on Wednesday to keep interest rates at their historic lows and to make no plans for a third round of quantitative easing after the second round ends on June 30.

They’ll keep the supply of bonds that they hold relatively stable, and that will help keep intermediate- to longer-term interest rates low,” he predicted. “As interest rates stay low, that will hopefully encourage lending, and that lending will encourage growth in the economy. The Fed’s primary tool is monetary policy and interest rates, and they’ve really done everything they can to keep interest rates low.”

The Federal Open Market Committee (FOMC) meeting will be its first since April 27 when it maintained the federal funds rate at 0% to 0.25% and said that conditions in the U.S. economy “are likely to warrant exceptionally low levels for the federal funds rate for an extended period.”

Got it? Gibberish? We’ll explain:

What the Federal Reserve does matters to folks in need of a Texas home loan for several reasons. Primarily, however, it’s because Texas home purchase loan rates and Texas home refinance rates tend to rise and fall almost exactly alongside the Fed’s rates.

Here’s why — in an oversimplified (but hopefully helpful) nutshell:

Interest rates rise when money in the economy gets tight. In a weak economy like the current one, when overall consumption is still far below where it needs to be to sustain a full recovery, the Fed wants to keep interest rates low to make it easier for folks to get loans and start businesses, use credit cards, and buy homes. To achieve this, the Fed increases the money supply, which lowers rates by limiting competition for the available dollars.

This can lead to inflation, debt, and dangerous currency devaluation on the global market if its not carefully controlled, which is why the Fed will eventually reverse course and try to shrink the money supply following an economic recovery.

In other words, eventually federal interest rates will rise, and home loan and home refinance rates will as well. But, if the Fed’s recent moves tell us anything, we’ll see historically low home interest rates for a while longer.

This is excellent news for Texas folks in need of a home loan, home equity loan, or home interest loans. Interest rates are anchored to the rock bottom, and here at Texas Lending, we’re offering the lowest home interest rates of anywhere in the Texas.

Tags: home equity, Home Loans, home purchase, homebuying advice, housing crisis, housing market, mortgages, recession, refinance
Posted in Home Loans, Mortgage News | No Comments »

How to Stand Out as a Home-Seller: Be Human

Monday, June 20th, 2011

Personal touches can pay off in a big way — especially in a competitive housing market.

For example, Aol Real Estate tells the story of one family who actually had an easy time selling their home, but a much tougher time buying (remember those days?). In the end, it was a personal touch from the mother of the family that made all the difference, and won her family the house:

After three unsuccessful tries, she gave up on foreclosures altogether and started searching for conventional listings. And when it came time to place an offer on the next property–a bright and sunny family home on a cul de sac–Lorena approached the purchase not just as a prospective buyer but also as the mother of young children.

Along with the offer, Lorena submitted a personal letter and a family photograph to the seller. In it, she described how one of her daughters had helped find the house and “was looking forward to having pool parties.” The very next day, the sellers accepted the offer, telling Lorena that they really appreciated the sentiment. It turns out that the sellers had children too and liked the idea of the home going to another family. And that’s not even the best part.

“The other person who was bidding, their offer was $10,000 over ours. But because of our letter and the photo, they chose us,” Lorena says.

The same lesson applies to folks both trying to sell their homes and trying to buy their homes here in Dallas. Getting just a little bit creative, and not just expecting an agent and the house itself to do all the work, can pay huge dividends.

This includes efforts to make a connection with the owner or buyer, like the letter mentioned above. If you’re selling, make it easy for potential buyers to imagine the great things about life — memories, holidays, family events — happening in that home by helping them visualize what life there would be about. Sell the community as well — gush about wonderful summer days down at the swimming pool and rec center, or about how satisfied you’ve been with the local schools, or some of the connections you’ve made with other parents in the community.

Sometimes, in a selling situation, it’s your house itself that can make that all-important personal connection. You just have to help it put on its best face.

Let’s say you live in a spec home that’s pretty similar to most other houses in your neighborhood. Just a little bit of remodeling or home improvement work can go a long way toward helping the house stand out from the crowd and form a personal connection with potential buyers. A new kitchen or bathroom that potential homebuyers love, and therefore remember, could make your home sell much quicker (and for a much higher asking price) than a similarly designed and sized home nearby.

Here at TexasLending.com, we can help. Our Texas home equity loans and Texas home refinance loans can both free up a bunch of cash that could then be used for large-scale home improvements. We’re proud to offer a diverse range of home equity and refinance products, and our Texas refinance rates are historically low. As result, we can make it easy for you to do what’s needed to thrive in a tough housing market.

Tags: home equity, Home Loans, home purchase, homebuying advice, housing market, refinance
Posted in Home Loans | No Comments »

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