Atlanta Real Estate Blog

If you’re looking to buy or refinance a home, I have great news to share with you.

Fannie Mae and Freddie Mac’s Baseline Loan Limit Will Increase to $453,100 for 2018

The Federal Housing Finance Agency (FHFA) just recently announced they will raise the maximum conforming loan limits for 2018 to a maximum amount of $453,100 – for reference, the loan limits for 2017 are $424,100. That’s $29,000 more buying power in 2018 without getting into Jumbo Loan territory. In certain high cost areas, the loan limit is even higher.

This means you may be able to:

• Purchase a higher priced home with more financing options, possibly including lower rates.
• Refinance an existing, higher-rate “jumbo” loan and possibly drop mortgage insurance premiums, too.
• Combine a 1st and 2nd mortgage.

If you have questions about this 2018 conforming loan limit change, or if you need a referral to a few trusted and proven lenders who have done millions of dollars worth of loans for my clients, please reach out to me. And if you have friends who may benefit from this news, please pass it along. I’ll be happy to help.

Robert Whitfield – Broker/Owner  Advantage Realtors  678-585-9691

This practice is egregious – and so wrong. Consumers are supposed to be able to rely on their agents to be a trusted and non biased adviser – this just goes to show you cannot select an agent simply because they work for a large well known national franchise brokerage firm.

 I want all our clients and prospects to know Advantage Realtors, a small specialized boutique brokerage in East Cobb, has never sought or accepted a kickback fee for referring any vendor. We have refused all such offers from vendors – mostly inspectors and home warranty companies. Our referrals of vendors is based strictly on the quality of the vendors service – and we refer several never just one. Our vendor relationships have been developed over time and our vendors are proven, trusted, performers that are tops in their industry. Advantage Realtors provides unmatched and personalized services and we expect the vendors we refer to do the same.

We have encountered a similar questionable practice pointed out in the article among some listing brokers here in Atlanta – namely the requirement in the broker comments section of a listing that buyers must have a pre-qualification from a specific lender in order to make an offer – even if they already have a letter from a reputable lender! This is an absurd practice known as “writing in”, and it reeks of an unhealthy under the table lead generation arrangement. We advocate for our clients that they do NOT need to get a “second pre-qualification” in order to submit an offer, and we have been successful so far.

Like every agent or broker who knows what they’re doing and how to run a business, Advantage Realtors requires all buyer clients we represent to be pre-qualified by a lender at a minimum, or better pre-approved for a loan or we don’t represent them. The resulting “lender letter” is sufficient evidence for all parties, sellers, banks, etc that our buyers are qualified to submit an offer in a certain price range and not a waste of anyone’s time. Moreover, having buyers get what is known in the industry as a “pre-qual” can be done with minimal effort and a brief phone conversation. It is just sound business practice to assure a buyer is actually qualified to look at certain priced homes – especially since we don’t just meet buyers at homes and open doors – we exert a significant amount of extra time performing extra due-diligence to better inform and protect our buyers – services like micro market price trend and valuation checks, free building structural, workmanship, and major system evaluations, and even monitoring of new homes under construction and advocating for our clients with regard to contract, inspection defects, and new construction quality issues – services other agents don’t provide and in most cases are not qualified  to provide, and not allowed by their broker to provide.  

Robert Whitfield – Broker/Owner Advantage Realtors

RISMedia January 31, 2017

Prospect Mortgage, LLC, a major mortgage lender, and two real estate brokerages have been ordered by the Consumer Financial Protection Bureau (CFPB) to pay more than $3.5 million in civil penalties and consumer compensation for participating in an “illegal kickback scheme” for mortgage business referrals.

Prospect Mortgage, headquartered in Sherman Oaks, CA., Corvallis, OR. based Keller Williams Mid-Willamette and Ventura, CA.-based RE/MAX Gold Coast all three violated the Real Estate Settlement Procedures Act (RESPA), according to the CFPB, which prohibits real estate agents and brokerages from recommending settlement services, such as title insurance, appraisals, inspections, and loan origination, to consumers in exchange for payment from these service providers.

“Today’s action sends a clear message that it is illegal to make or accept payments for mortgage referrals,” said CFPB Director Richard Cordray in a statement. “We will hold both sides of these improper arrangements accountable for breaking the law, which skews the real estate market to the disadvantage of consumers and honest businesses.”

For More Info…

The full impact remains to be seen, but here’s a start – on day one the Trump administration has already taken action that affects real estate – the permanent suspension of the FHA 1/4 % Mortgage Insurance Premium Reduction announced just last week. This reduction was estimated to save buyers about $500 a year – so while not a deal breaker for most buyers, the mortgage and real estate industry naturally welcomes anything that will help buyers qualify for a loan. The good thing, at least for now – the FHA loan limits for the Atlanta Market recently increased to $358,800 which makes this loan a great option for more buyers – especially those who need (or want) to take advantage of the minimum 3.5% down payment – most other loans require 5% down.

From Mortgage News Network:

The Department of Housing and Urban Development (HUD) issued a statement that the reduction in the Federal Housing Administration (FHA) mortgage insurance premium that was announced last week has been suspended indefinitely.

“FHA is committed to ensuring its mortgage insurance programs remains viable and effective in the long term for all parties involved, especially our taxpayers,” the HUD statement said. “As such, more analysis and research are deemed necessary to assess future adjustments while also considering potential market conditions in an ever-changing global economy that could impact our efforts.”

The HUD statement added that “FHA will issue a subsequent Mortgagee Letter at a later date should this policy change.”

This is going to be an interesting year, and I predict more policy changes – hopefully for the best of the consumer and the country.

If you’re considering buying a house in an area where homes are flying off the market and bidding wars are common, (such as we have had a few time in Atlanta over the last few years) a well crafted escalation clause in your offer can be an important strategy to use in multiple-offer situations.

An escalation clause allows your offer to automatically increase by a certain amount in response to a competing buyer’s higher bid, with a maximum offer price stated in the contract.

Here’s an example of how this strategy works: Say you offer $250,000 for a house. In your escalation clause, you specify your bid can automatically go up by $2,000, with a maximum offer of $268,000 for example. When another buyer bids $252,000, your lower offer doesn’t lose out right away as it normally would, because the clause automatically escalates it to $254,000.

Of course there are several important considerations to make before using an escalation clause. Will the house still be a good deal at the maximum price, and will it appraise in case your offer escalates to the maximum price in your clause? Will the seller/bank accept your offer with an escalation clause?

Above all, you’ll need to ensure your mortgage approval/pre-approval amount covers the maximum price increase listed in the clause. It’s imperative to talk this strategy over with a knowledgeable agent to make sure it is a viable option for the home in question, your situation, and the market, and then run this plan by your lender before deciding to use an escalation clause.

The Bottom Line: a lot of buyers miss out in competitive low inventory markets and trying to submit an ordinary offer in a bidding war situation is one of the ways that happens. But with the right strategy and one that makes financial sense, you may be able to win an offer on a home you really like – even in this kind of environment. The right options and strategies can give you an edge in any market – the key is having an agent who understands strategies like the escalation clause.

Contact Robert Whitfield 678-585-9691 with questions or to discuss his elite level Buyer Representation services and Wise Buyer Program™.

And if you’ve been thinking about buying – why I suggest you take action now!

Nationwide, wage growth has lagged behind home prices, and the same is true here in Atlanta.

Back in April,  RealtyTrac, reported that wage growth in the Atlanta area in 2013 and 2014 lagged far behind home prices, with home prices growing at more than 10 times the rate of wages; only San Francisco saw a greater disparity.

I recall counseling many prospective buyers and actual buyer clients in 2013 and 2014 that prices were increasing and that trend had no end in sight, especially for new construction homes – fortunately most acted on my advice and got a great home at a good value. In one unfortunate case because of possible company sale and job relocation, a Buyer Client I signed on in Dec 2013 had to hold off his search for nearly a year and could not act in 2014. Fast forward to Q1 and Q2 2015 and the type home he wanted (new construction) is simply not possible in his max price and preferred market areas. It’s too bad when someone completely misses a market window of opportunity – (not because they refused to acknowledge market realities or listen to sound advice from a market expert), but simply as in my clients case because it was impossible for him to act when the opportunity was there.

I don’t see us going back to 2014 prices anytime soon, if ever, especially for new construction, but there are two good things for the market right now relative to 2014:  1. interest rates have actually come down 13% over the last four quarters (currently about 3.7% ) but count on this to increase, and, 2. while prices are still trending up in fall 2015, they are not rising at nearly the velocity they were from 2013 to early 2015.

According to RealtyTrac’s new Affordability Report, from  Q1 2014 to Q1 2015, home prices have risen beyond wages in all of Metro Atlanta’s six largest counties.

Here’s a graph of RealtyTrac’s findings:

Although home prices in Cherokee and Cobb County were relatively in line with wages, they still grew at twice the rate of wages– while in DeKalb, home prices vs wages grew at an astounding 20 percent, spurred on largely by new building and some great revitalization in older neighborhoods areas around the city of Decatur and westward toward Atlanta. DeKalb home prices in most markets south of Decatur had nowhere to go but up because for many years home prices have been severely depressed in part because of excess foreclosure inventory and other factors such as high crime rates and poor schools.

Home Affordability in 2015 Improves Even as Home Price Growth Outpaces Wage Growth…But, Forces of Change Loom on the Near Horizon

According to a study conducted by RealtyTrac and Clear Capitol, which was released on October 1, 2015,  average home price appreciation outpaced average wage growth between the first quarter of 2014 and the first quarter of 2015 in 397 out of 582 (68 percent) U.S. counties analyzed for the report. In its report, RealtyTrac emphasized that since bottoming out in the first quarter of 2012, the average U.S. home price has risen 24 percent, while the average weekly wage nationwide has risen 7 percent.

As the video explains home affordability improved to a two year low in Q1 2015 even with rising home prices – and a big driver has been the current low interest rates. Between early 2014 and early 2015 the average interest rate on a 30-year fixed rate mortgage dropped 57 basis points (13 percent), from 4.34 percent in the first quarter of 2014 to 3.77 percent.  What should be of concern now, and motivate any would-be buyers into action sooner rather than later – all of the Feds recent chatter about raising the interest rates. We just escaped a planned rate increase last month, but with the economy continuing to improve a rate increase is only a matter of time – many experts believe we will see an increase by December. Any uptick in interest rates will have a corresponding negative impact on metro Atlanta’s home affordability index, impacting both the monthly payment and size of loan a buyer can qualify for.

Want more info about the current market, or to discuss some of the historic benefits of buying a home in the fall – Call me now  678-585-9691 –  Robert Whitfield

 
https://youtu.be/uYFGnYx4lhM&rel=0

What is a TBD Approval? Why is it the way to go?
TBD (To Be Determined) approvals are for buyers obtaining financing who get their loan file underwritten to the furthest extent possible – without having yet identified a property to purchase. With a TBD, income, assets, credit, etc are examined leaving only the property itself to be determined. Once the purchase contract is created, the remaining needed items to fund the loan are minimal – an appraisal and title report.

Only a Bank, Credit Union or Direct Lender has this capability because they have “in-house” underwriters. The only remaining items for a “Clear-to-Close is a copy of the borrower’s purchase agreement and an appraisal on the property.

Who do they benefit? Everyone Involved.

Real estate agents know they have a solid buyer before going out looking at homes and writing up offers. A deal falling out because of a pay stub or a strange deposit on a bank statement 20 days into escrow is a huge time waste and emotional drain.

Buyers have more confidence with their offers knowing that they ‘check out’ with the underwriter before pulling out the credit card for an appraisal. More importantly – sellers have been known to accept a lower offer from a buyer who has a “Loan Approval Subject Only to Appraisal and Title”, versus a buyer who has only been pre-qualified.

Sellers have less fall out when dealing with a TBD approved buyer. If there is fallout, it would be because of the property that they are selling, not the buyer. Sellers hold TBD approved buyers in esteem somewhere between buyers who only have a ‘standard pre-qual’ and the highly coveted ‘all-cash’ buyer. There are times when sellers will actually accept lower offers from an “approved buyer” because they want or need  a firm sale date, and prefer not to risk letting a buyer who merely has a Pre-Qualification pull their property off market for 15+ days while they seek loan approval.

With a TBD Approval a lot of potential unknowns are eliminated up front, and all parties involved benefit.

  Over the last four years, Penske Truck Rental has produced an annual list of its *top moving destinations in the United States. Once again, the Atlanta metro area remained No. 1 for the fourth consecutive year.

The following list of top move destinations for 2013 was compiled in January 2014, and last year’s rankings for 2012 are noted in parentheses. New to the 2013 list is Las Vegas, coming in at number10. Sarasota, FL, number 10 in 2012, was combined with the Tampa, FL metro area for this year’s list.

1. Atlanta (1)
2. Tampa, Fla./Sarasota, Fla. (new combined entry)
3. Dallas/Fort Worth (2)
4. Orlando, Fla. (4)
5. Phoenix (3)
6. Houston (6)
7. Seattle (8)
8. Chicago (5)
9. Denver (7)
10. Las Vegas (new!)

“We have seen a continued migration of Penske Truck Rental customers from the Northeast and Midwest parts of the U.S. into these areas,” said Don Mikes, Penske senior vice president of rental.

Penske created a series of infographics to complement their list of top relocation cities.  We have attached their Atlanta infographic which shows Atlanta is famous for its international sports, soft drinks and its supply of Georgia peaches. The graphic also shows Atlanta’s median household income to be $46,146, and it displays the average listing price as $448,387.

*Penske creates their annual Top 10 Moving Destinations list through an analysis of one-way consumer truck rental reservations made online, and through their central reservations call center.

The Federal Reserve’s decision to forgo a planned tapering off of bond-buying caught most by surprise yesterday. That included the Dow and the S&P. After the announcement made by Treasury Chair Ben Bernanke, both rocketed to record highs.

Most analysts had expected the Fed to implement a slow withdrawal of its bond-buying program … a program that presently sees about $85 BILLION worth of bonds being purchased each month.

If yesterday’s Fed move was meant to counteract a slowdown and re-stimulate the housing market … it worked.  Interest rates reacted quickly and moved downwards.

Pair this Fed announcement along with the report released by the Census Bureau showing new building permits and housing starts a bit lower than had been projected … and you understand why the Fed’s decision is seen as such good news by housing professionals … and those hoping to buy or refinance a home.

The rising interest rates seen over the last month or so (a direct result of the prediction that the Fed would taper its bond-buying soon) has definitely taken a toll. Besides the obvious negatives that directly affect hopeful new home buyers, homebuilders, and real estate professionals … there’s the fact that fewer housing starts stagnates the economy through the lack of job growth and spending power.

Meanwhile, local Atlanta homebuilders are still expressing confidence at levels not seen for several years. But concerns were definitely being raised over what was being seen and heard from the Treasury over the last few weeks.

The fact that the Fed recognized that their stimulus was still needed and changed course on actions to curtail bond buying (at least in the short-term) is a huge positive.

My suggestion to anyone that is sitting on the fence regarding an Atlanta home purchase … pick-up the phone and contact me – 678-585-9691. I can refer you to three of the best lenders in Atlanta – so you can take advantage of some of the best mortgage rates in history.

Home prices in East Cobb and North Fulton have increased month over month for the last four months in a row! Data through April 2013 presented by S&P   Dow Jones Indices for its S&P/Case-Shiller Home Price   Indices showed average home prices increased 11.6 percent and 12.1   percent for the 10- and 20-City Composites in the 12 months   ending in April 2013.  The   cities of Atlanta, Dallas, Detroit and Minneapolis posted their highest  annual gains since the start of their respective indices.   Atlanta, Las Vegas,   Phoenix and San Francisco posted year-over-year gains of over 20   percent in April. Mortgage rates are trending up as   well. The average 30-year fixed-rate mortgage (FRM) rose from 3.93 percent   last week to 4.46 percent this week; the highest it has been since the week   of July 28, 2011. Last year at this time, the 30-year FRM averaged 3.66   percent. This represents the largest weekly increase for the 30-year FRM   since the week ending April 17, 1987. Despite recent gains in mortgage rates,   homebuyer affordability remains which should help fuel the ongoing   housing recovery.

If you’re planning to buy a home and have not yet taken advantage of the outstanding home prices and low interest rates you should read this. Things could get a little tougher with regard to downpayment requirements in the next few months. Hopefully regulators like the CFPB won’t go overboard because that will do nothing but harm the economy and hurt the housing recovery which is already nicely underway.

>Housing Industry Awaits Mortgage Rule On Down Payment Size.

Need a referral to a great lender?  Give me a call.

Robert Whitfield
Broker/Owner
Advantage Realtors
678-585-9691