Are you ready to dive into homeownership this year? Are you asking yourself what are the different types of mortgages available? It’s helpful to understand some of the most common types of mortgages available, as well as some unique options so you can be prepared when you meet with your lender. 

Interest-Only

Interest only payments mean that you are not paying off the principal on your property. These types of mortgages are popular among first time homebuyers because it allows them to pay a lower monthly payment for the first few years of ownership. This type of loan does not restrict the owner to only paying interest, if you choose to you can also pay more every month so that extra money goes towards your principal.  

Fixed Rate (Conventional) 

A fixed rate loan is the most common type of conventional loan – this option provides the homeowner with a single interest rate and monthly payment for the entire term of the loan, which is typically 15 or 30 years. This type of loan is ideal for the buyer who is looking to plant roots and doesn’t want to be surprised by fluctuating payments. This loan type is very easy to understand, and many buyers appreciate it because they don’t have to worry about their monthly payments changing at any point in time, unless they choose to refinance. The biggest benefit of a fixed rate mortgage is that even if interest rates go up, your payment will not change. 

Adjustable Rate Mortgage (ARM)

An adjustable rate mortgage (ARM) offers interest rates that are usually lower than what you would get on a fixed rate mortgage for a specific period of time. For example, the first ten years will have one interest rate and for the remainder of the loan it will adjust once a year in accordance with what current interest rates are. This means that if interest rates skyrocket so will your monthly payments, and if they drop then your payments will also be lower. This type of loan is best for the home buyer who is purchasing a starter home with the intention of moving on within a few years, or someone whose lifestyle involves constant moving around. There are different options for how long the fixed rate period will last in an adjustable rate mortgage – it could be fixed for five years, seven years, ten years or other options depending on what the bank or lender can offer. This means that your rate is fixed for that amount of time and then it will adjust once a year for the remainder of the loan. Adjustable rate mortgages typically carry a 30-year term. 

FHA 

An FHA loan is a mortgage that is insured by the Federal Housing Administration, and this is one of the most popular low-down payment loans available to buyers. Buyers love this option because it allows them to purchase a home with as little as 3.5 percent down. FHA loans also make it possible to qualify for a mortgage with lower credit and higher debt than some other programs. These types of loans are typically reserved for low income buyers or first-time home buyers, but you don’t have to be a first-time home buyer to be able to use one – many lenders are authorized to issue FHA loans to other borrowers. To qualify for an FHA loan, you will need to meet these requirements:

• If your credit score is 580 or higher, you will need to put down at least 3.5 percent
• If your credit score is between 500-579, you will need to put down at least ten percent
• A debt-to-income ratio of 50% or less
• Steady employment and income
• You must live in the home and use it as a primary residence
• You have not had a foreclosure on your record within the last three years

These eligibility requirements are a lot more lenient than other mortgages, which means that it provides a wider selection of individuals the opportunity to fulfill their dreams of becoming homeowners. 

Veteran (VA)

A VA, or Veteran Affairs loan, is a type of loan that is available to individuals who have served in the United States military. If you qualify for a VA loan, then you can become a homeowner of an incredible property with no down payment and no mortgage insurance requirements. This type of loan is backed by the U.S. Department of Veterans Affairs and there are certain eligibility requirements you have to meet, including:

• You are currently active duty military, or you are a veteran who has been honorably discharged
• You completed at least 90 consecutive days of active service during wartime, or at least 181 consecutive days of active service during peacetime
• You have more than six years of service in the National Guard or Selective Reserve

You may also be able to qualify for this type of loan if you have a spouse who died in the line of duty. In order to go through the process of qualifying for a VA loan you will need to receive a Certificate of Eligibility and then fill out paperwork to determine how much you will be able to borrow. While every lender has their own set of criteria for underwriting and approving borrowers for a loan, those who are applying for a VA loan typically have less strict requirements to fulfill aside from those for eligibility. Borrowers will need to show that they have the income necessary to make their mortgage payments, they shouldn’t have a massive amount of debt and while there is no minimum credit score requirement it would be difficult to get approved with a FICO score that is lower than 620. 

Balloon

This type of loan has some significant pros and a very big downside to take into consideration. A balloon loan is any type of financing that includes a lump sum payment that is due at any point during its term – this usually happens at the end of the loan. A balloon mortgage can be interest-only, which means you will owe the entire balance of the loan at the end of the term, or you can choose to pay interest and principal so that the lump sum payment is smaller at the end. One of the main benefits of a balloon mortgage is that your monthly payments will be lower, which can be a big incentive for many people to become homeowners. The downside of this option is that it is a higher risk loan for both the buyer and lender, the rates are not as favorable as they are on traditional loans and it may be difficult to refinance if you choose to. 

Jumbo

A jumbo loan is in reference to a mortgage that is too big for the federal government to guarantee. The current limit is around $500,000, which means that a borrower would not be able to qualify for lower interest rates that are available on smaller loans. This type of loan is also known as a non-conforming conventional mortgage, but they are considered riskier for lenders since they won’t be protected from a loss if the borrower defaults on their payments. The underwriting guidelines for jumbo loans are very strict – borrowers must have the following to qualify:

• A credit score higher than 700
• A low debt-to-income ratio, unless the borrower has plenty of cash reserves
• Savings in the bank – some lenders will require borrowers to have at least a year’s worth of mortgage payments saved to qualify
• Additional documentation
• Some lenders may require more than one appraisal
• A higher down payment – at least 20%

Bridge

A bridge loan is known as “gap financing,” and it’s something that many homeowners utilize if they are trying to buy a new home before selling their current property. This type of loan is secured by your existing home and it “bridges the gap” between the sales price of a new home and the new mortgage. What happens is that essentially you end up borrowing your down payment on a new property before your current property has sold. The benefits of using this type of loan include:

• It allows a homeowner to buy a new home without stressing out about selling their current property. 
• Some bridge loans might not require monthly payments for a few months, and they offer flexible payment options. 

Some of the drawbacks of a bridge loan include:

• A bridge loan is typically more expensive than a traditional home equity loan.
• The borrower must be able to qualify to own two homes at the same time. 
• It’s stressful keeping track of and maintaining two mortgages at one time in addition to the interest from the bridge loan. 

Qualifying for a bridge loan doesn’t follow specific guidelines and requirements, most lenders will follow an approach of “does it make sense?” 

If you’re ready to pull the trigger on homeownership contact us today – we’ll help you navigate the entire process from start to finish – including helping you secure the best mortgage option available.

I’m sharing this with the community because more people need to know what’s going on and hopefully will get involved.

5-15-20

Dear College Station City Council:

First, Let me say thank you for all the time you’ve given our community.  I don’t think the issue about taxing the short-term vacationion rentals isn’t as cut and dry as Bryan would have you believe.  I sincerely appreciate you taking the time to read my argument against Brian’s proposal.

The city manager’s assistant, Brian Piscacek, would have you believe that a home which is being leased to guests on occasion or used as a vacation rental is basically the same as a hotel. Don’t believe it. It’s not the same. It does not have hundreds of people like a hotel. A wedding venue has a large group of people for gatherings. But that’s not what this is either. A home has a few people at a time who come to visit and sleep over for a night or two. Typically a family. A hotel is something completely and totally different. A home should not be treated like a hotel or have an occupancy tax like a hotel. Especially not if the guest shares the same spaces like the kitchen as the homeowner or if the apartment is connected to the same roof as the one that the HOMEOWNER IS LIVING IN. Sometimes the homeowner rents out a single bedroom within their home and shares the living room and kitchen.  Brian Piscacek is trying to convince the city council that homeowners have a  responsibility to collect a hotel tax for short-term rentals just like a hotel with  100 beds and parking spaces and a swimming pool, an elevator and a cleaning staff and maintenance crew.   It’s just not the same thing!

The College Station City Council MUST realize that it’s because of how high the Brazos County taxes are that many people feel compelled to lease out their private properties to help pay for personal  taxes. Do you think homeowners do it because they want to compete with the hotels? Do you think they want to give up their privacy? Most do it because the taxes are overburdensome in Brazos County!

No matter what argument  anyone tries to make, a short-term rental ordinance has absolutely NOTHING to do with safety of renters or the good of the community. Home owners don’t need the cities  safety brochures when a guest is coming to stay! We’ve lived safely in our own homes all these years so why do we need your help now? This has everything to do with over reaching governmental restrictions, erroneous and unprovable assumptions, more money for the government, and the hotel industry trying to shut down vacation rentals like VRBO, Airbnb, and Homeaway! One can only speculate Who in the hotel industry thought the little vacation rentals were taking away from the hotel revenues in B/CS and made it a point to reach out to Mr. Piscacek and convince him to make this an issue with the College Station City Council when it clearly is NOT.

Homeowners have a right to do what they want with their own private properties. They shouldn’t have to ask for permission or pay another duty tax to an overreaching, overbearing group of people who sit around trying to justify their existence by trying to think up ways to leech money out of home owners. It’s not right.

My husband is probably going to retire in a few years. That’s about when our house will be paid for. But our taxes are over $16,300 a year! Without a mortgage we are still having to pay over $1,358 a month just for taxes and that doesn’t even include insurance! That’s like another mortgage payment after our house is paid for! So, for self-preservation, we have recently started a vacation rental in our garage apartment attached to our home to pay for the extraordinarily high Brazos County taxes. It’s my understanding that the College Station city council members may be duped or coerced into thinking that this new short term rental regulation is fair or the right thing to do, and I can assure you that it is most emphatically NOT.

If I lease out my property every day of the year, which is absolutely impossible because I’m not a hotel, I don’t advertise like a hotel, I’m not visible like a hotel, I’m not staffed with cleaning ladies like a hotel so I can’t get a whole house sanitized and ready like a hotel can get a single room ready in a few hours.  I’m probably not going to make $16,000. to cover my taxes, but it may help a little. You on the other hand, …..the College Station City Council, will only hurt the community and me in particular again by imposing more regulations and fees for short-term rentals. Please oppose this.

People need to be encouraged to fend for themselves. Not discouraged or provided with disincentives like this new regulation. This suggestion of government overreach once again absolutely makes my blood boil and I am certainly not the only one in College Station who feels this way.  Brian Piscacek and the City Council are right on track to tick a lot of people off.   People who do short term rentals  are quiet, law-abiding citizens, and they take beautiful care of our properties.

How are people supposed to retire? How are people supposed to support themselves when College Station City Council  keeps imposing breathing fees? Please STOP IT. Just leave people alone. Our tax rate is absolutely ridiculous as it is.

Our poor customers through VRBO are already paying
1 Property damage protection coverage
2 Cleaning fees
3 Booking fee
4 Processing fee
5 Base commission
6. We’ll call number six the Brian Piscacek occupancy breathing tax. No one will mind. Everyone will understand exactly what it is and thank him for the opportunity to pay the city for breathing when they visit a short-term rental in College Station.

For your information, and this is important… I’ve had guests from Washington DC, Kenya, and all over the state of Texas visit this year. Initially all of my guests canceled because of the Covid 19 scare. But then, people decided to come to College Station because I could offer isolation amid the Covid 19 situation and still have a big beautiful private back yard to get out of the house and play in. I tell people how wonderful College Station is and it boosts tourism even in a turned down economy. They could come here to my place with self check-in and out, but they absolutely could NOT go to a public hotel. Mr. Piscacek is perfectly ok with the idea of imposing additional regulations, restrictions, taxes/fees, government interference, and what I feel is punishment for thinking outside the box, for bringing people to College Station even though the hotels practically slowed to a stop because of this unfortunate virus.

Following in the footsteps of the rental registration, Mr Piscacek speculates:
“You know perhaps, registering with annual renewals ensuring that we have proper local contact information providing educational materials and creating and ensuring a safe living environment for the guest that is coming to stay,” said Piscacek.
Rental owners feel that this program has been an epic failure in the city of College Station with the exception of emergency services. Everyone knows that the only owners who actually register their rental properties are the owners who live here. Not most of the absentee landlords who never even bother to respond to the letters that are sent to them. Again, this is an overreaching farce.

We don’t need educational materials ensuring a safe living environment for us or our guests in OUR OWN HOMES! If that’s what you’re giving us for the cost of registering a short-term rental you can keep it! It’s a waste of taxpayer dollars.

Please… Say no to regulating Airbnb, vacation rentals, short-term rentals, whatever you want to call it. We don’t need you to tell us how to make our properties clean and safe anyway. We live here. I’ve raised six children here and 13 grandchildren. I think I’m pretty good at it. I don’t need your brochures to tell me how to clean my house. I’m sure that’s not what this is about anyway. It’s about money. It’s about College Station collecting our money because the hotel industry wants to shut us down. Why should we feel obligated to pay this occupancy tax and be forced to register when we are clearly helping the community. These people spend a lot of money in B/CS when they come here to visit. This is a good thing.   We shouldn’t be punished for it.

Thank you very much But… NO THANKS!

Most genuinely and sincerely,
Myke Leatham
Brazos County Realty, Broker/Owner
13464 I and GN Rd
College Station, TX 77845
Willow Run Estate Airbnb

Bob Brick

Place 1 Councilman

979.764.3541
[email protected]

John Crompton

Place 2 Councilman

979.764.3541
[email protected]

Linda Harvell

Place 3 Councilwoman

979.764.3541
[email protected]

John Nichols

Place 5 Councilman

979.764.3541
[email protected]

Dennis Maloney

Place 6 Councilman

979.764.3541
[email protected]

Interest rates have a significant impact on our economy, the stock market and the real estate market. The central bank of the United State – also known as the Federal Reserve – is in charge of maintaining economic and financial stability. They work hard to keep the economy thriving by raising or lowering the cost of borrowing money, which has a very significant impact on your wallet. While the committee looks at a broad range of data and economic indicators when making their decision about interest rates, they really pay attention to employment numbers and inflation. Basically, the way it works is that when the economy slows down, or looks like it may be taking a pause, the Federal Reserve may choose to lower interest rates in an effort to incentivize businesses and individuals to invest more money, hire employees at small business and spend more freely to encourage growth. On the other hand, if the economy is really taking off and growing fast then the Federal Reserve may increase rates, which can cause employers and consumers to pump the breaks on any big financial investments and decisions. 

Historically, the Federal Reserve will aim to keep interest rates at a healthy 2.0% to 5.0%, which indicates a thriving and stable economy. However, the all-time low is zero, and the Fed has lowered the rates to a range of 0.0% to 0.25% twice – once during the financial crisis in 2008 and once in March 2020 during the global Coronavirus pandemic. After the first significant drop in 2008 rates were not raised again until December 2015, when the economy significantly improved, and unemployment rates steadily declined. 

There are many ways that interest rates can affect you as a business owner, a consumer and as a potential buyer looking to enter the real estate market. Here are four ways that you can expect the Fed to impact your wallet and savings:

• Credit Card Rates

Most credit cards operate with a variable interest rate, which is tied to a prime rate (the rate that banks award to preferred clients who have a good credit score). The prime rate however is based on the Federal Reserve’s key benchmark tool – the federal funds rate. In other words, when the Federal Reserve lowers or raises the benchmark interest rate, the prime rate will also fall or rise with it. This means that interest on credit card balances will also fluctuate and it can significantly affect your budget and payments. 

• Savings Accounts

If you have all your life savings stored in an account at a bank, then you have the opposite priorities of a borrower. While someone who uses their credit card often will aim for a lower interest rate to keep their payments low, a saver will celebrate when the Federal Reserve initiates a rate hike and take a big hit when rates are slashed. Additionally, banks usually choose to lower the annual percentage yields (APYs) that are offered on their consumer products like savings account whenever rates are cut. 

• Mortgage Rates

You may be surprised to learn that mortgage rates are not directly tied to the decisions the Federal Reserve makes in regard to interest rates. Interest rates on home loans are more closely tied to the 10-year Treasury yield, which is the benchmark for a 30-year fixed mortgage rate. This means that just because the Fed slashed rates to nearly zero just two months ago, interest rates for home loans did not drop down to zero. Another example to take into account is that the Federal Reserve hiked rates four times in 2018, but mortgage rates declined throughout the year into late December. 

• HELOCs

If you hold a mortgage that has a variable interest rate, or you are looking to take out a home equity line of credit (HELOC), then you may feel more of an influence from the Fed than if you hold a traditional fixed rate mortgage. Interest rates on HELOCs are tied to the prime rate, which means that if the Fed raises or cuts rates, then the HELOC rate will adjust accordingly. 

How Interest Rates Affect Spending & Buying

Every time a borrower takes out a loan there is always the chance that they cannot or do not repay the money. In order to compensate for this risk lenders tie interest into the loan to ensure that they earn some money on the loan as the borrower slowly but surely repays it. The lower the interest rate, the more willing consumers will be to borrow money so they can make big purchases like cars or houses. When consumers receive a low interest rate, they end up with more money to spend, which in turn creates a ripple effect of increased spending throughout the economy. In this scenario businesses also benefit from low interest rates because it encourages them to invest more money into their business due to the low cost of borrowing and in turn output and productivity can increase. 

On the other hand, when interest rates are high it means that consumers won’t have as much disposable income and will need to curb their spending habits. When high interest rates are paired with strict lending standards then the banks make and offer less loans. This means that not only are consumers spending less money, but businesses are also cutting down their spending and reducing their output and productivity. 

It’s important to understand that The Federal Reserve doesn’t actually set mortgage rates for buyers. Instead, it determines the federal funds rate, which impacts short-term and adjustable interest rates. This rate is the one that financial institutions use to lend money to one another. When the federal funds rate increases it becomes more expensive for banks to borrow from other banks and then these higher costs are passed down to consumers in the form of higher interest on lines of credit, car loans and mortgages. As rates rise this could mean that getting a new mortgage loan could come with a higher price tag. Even the smallest fluctuation in interest rates can have a very significant effect on costs for buyers. This could also have an effect on rentals because if potential buyers choose to continue renting due to high borrowing costs then this additional demand could drive up rent prices. 

Interest rates also have a profound effect on the value of real estate, in addition to the supply and demand for properties. Rising interest rates could significantly suppress home prices and bring them down. Because a higher interest rate makes a mortgage less affordable on a monthly basis then sellers could be forced to drop their prices in order to attract buyers. This could be a great opportunity for buyers who are looking for a great deal on a property, especially because the option to refinance the mortgage is always available if rates drop.  

There are many different mortgage options available to buyers who are interested in entering the real estate market. It’s important to go over all of the options with a trusted and experienced lender who can walk you through the process of applying for a loan and provide guidance through the entire underwriting experience. Some of the most popular and common mortgage products include a fixed rate mortgage, adjustable rate mortgage, FHA loan and VA loan. All of these options have a list of requirements that need to be met in order to qualify as well as various criteria that can make getting a loan more difficult or easier depending on your personal financial situation. There are also loan product types available to incentivize buyers to enter the market even if they can’t afford a 20% down payment or if they are struggling with a low credit score. 

Interest rates have a significant impact on our entire economy by influencing stock and bond interest rates, consumer and business spending, inflation and recessions. Understanding the relationship between interest rates and the economy is important so that you can get a good idea of the big picture and it will ultimately help you make more informed investment decisions. Understanding how interest rates are influenced and how they can impact your buying power is also important because it will empower you to make more informed and intelligent decisions when applying for a mortgage or other line of credit. 

If you are interested in learning more about interest rates on mortgages, please don’t hesitate to connect with us so we can refer you to a wonderful lender who can assist you with all of your needs and answer any questions that you may have. We would also be happy to share information on the current state of the market, how interest rates are currently affecting home prices and show you some of our featured properties currently listed for sale. We look forward to hearing from you soon and helping you make your real estate dreams a reality!

Whether you are buying or selling real estate you are bound to come across words and terminology that you have not heard before, or you are unfamiliar with. Many real estate terms are universal, however there are certain words that might describe the same thing but are used in different situations. For example, title insurance, which protects your property against hidden liens or potential ownership issues will always be referred to as title insurance. However, a term like “closing,” which refers to the completion of a real estate transaction could also be called a “settlement” elsewhere in the country. Whenever you come across a word that you don’t understand it’s always a good idea to look it up, especially when it comes to a big financial investment like buying or selling real estate. You can easily look up the definition of a word online, ask your real estate agent to clarify what something means, or explore the real estate glossary that we have put together for you in this post. There are many words and terms to be included in a real estate glossary, but in this post, we’ll go over the top 10 phrases that you should understand. 

Property Sold “As-Is”

When looking at properties for sale, you may come across descriptions that say the home is being sold “as-is.” This means that when the home is sold the buyer will receive the property exactly as it is, including any structural or cosmetic defects. The seller will not negotiate on price and will not offer concessions or credits for repairs necessary on the property. Buyers who look at properties that are listed “as-is” should still get a thorough home inspection by a qualified home inspector, because if anything major does pop up during the inspection it allows the buyer to back out of the sale if they need to. 

Comparative Market Analysis (CMA)

The hardest part about selling a home is locking in the perfect price at which to list – you don’t want to go too high, but you also don’t want to list too low and leave money on the table. A comparative market analysis is a tool that a real estate agent will utilize to help a seller figure out how much your property is worth, and how much it will most likely sell for in comparison to other recently sold properties in the neighborhood. A comparative market analysis, commonly referred to as “comps,” will look at recently sold properties that are similar to your own home – they have to be comparable in square footage, amenities, features, upgrades, bedroom/bathroom mix and can’t be too far away from your own home. A CMA will also only look at recent sales no further back than six months in order to paint a clear picture of what the market looks like in your neighborhood. A CMA is also something that buyers will take a look at when evaluating properties for sale to make sure that they are not overpaying for a home if comparable properties have recently sold for less. 

Earnest Money Deposit

The earnest money deposit is an amount of money that you put down, in addition to your down payment, that shows how serious you are about purchasing a property and gives the seller a commitment of your intent to buy. It can also be referred to as a good faith deposit. This deposit is meant to protect the seller in case the buyer backs out of the deal – it’s typically around one to three percent of the sales price and is held in an escrow account until the deal is complete. If all goes smoothly through the close of escrow, then the money is applied to the buyer’s down payment or closing costs. 

Closing

Closing is the final stage of the real estate transaction – the common phrase you will hear is “close of escrow,” or “closing escrow.” The date is agreed upon when both the buyer and the seller go under contract on the home and when the closing date arrives, the property is legally transferred from the seller to the buyer. 

Escrow

Escrow is a part of the home buying process and it refers to the third party that holds something of value during the transaction. This is most often the earnest money deposit that the buyer submits as part of their commitment to purchasing the property. When the transaction comes to a close escrow will release all funds to the seller, which will include closing costs, down payment, earnest money deposit and any additional funds that were agreed upon by the buyer and seller. Escrow also plays an important role when it comes to paperwork that needs to be completed during any real estate transaction, including documents that need to be notarized. 

Gift Letter

Buying a home is a very big financial investment, and often times many buyers will seek or receive help from loved ones with the hefty upfront costs of buying a house including the down payment and closing costs. If a buyer receives a generous check from parents or a loved one that is meant to cover a portion of the money necessary to buy a house, they will be required to provide a gift letter. A gift letter states that the funds provided are a gift and there are no expectations for the money to be repaid. Lenders request this letter because they need to account for all money that is being contributed towards a purchase. 

Loan Closing Costs

Closing costs can often come as an unpleasant surprise to a buyer, especially after forking over a hefty amount for a down payment. Closing costs include various fees for the services and expenses required to finalize a mortgage – closing costs are something you pay for when you purchase a home as well as if you choose to refinance. Closing costs are split between the buyer and seller and they can run between two and five percent of the loan amount. There is room for negotiation on some of the fees included in the closings costs and you may also have the option to fold these fees into your loan so you can finance them over time versus paying for them upfront. 

Loan Commitment

A loan commitment shows that your lender has preapproved you for a mortgage based on your credit and income. This is a letter that most lenders will issue to verify your approved loan status and it can significantly help a buyer who is up against other buyers on a specific property. Making an offer on a property with a loan commitment shows the seller that they can take your offer seriously because you have the ability to complete the deal. 

Off Market

An off-market listing is a term that is used to define a property that is for sale, or has already been sold, without any public advertising. Off market properties can be exclusive high-end homes or it could be a home that needs to sell quickly. Some sellers see value in maintaining privacy when they look to sell their homes, and some people may see off market deals as very appealing because there won’t be as much competition on price. The best way to access off market listings is to work with a professional and experienced real estate agent who can tap into their network and professional relationships so they can identify these properties. 

Private Mortgage Insurance (PMI)

Private mortgage insurance is a type of mortgage insurance for conventional loans that can increase the cost of a loan and is typically included in the total monthly payment. This type of insurance is typically required of homebuyers if they put down less than 20 percent of the home’s purchase price. This type of insurance protects the lender in case the homeowner defaults on the loan, and it also allows buyers to purchase a home even if they don’t have the required 20 percent down payment. The average PMI premium can range from .55 percent to 2.25 percent of the original loan amount, and this is strongly influenced by your credit score and loan to value ratio. 

There are many other terms and words in the real estate industry that you may not be familiar with, especially if you have never purchased or sold real estate before. That’s why it is so important to work with a team of experts who can guide you through the process from start to finish, whether you are a first time buyer or a seasoned investor. Our team at Brazos County Realty boasts a wealth of knowledge and expertise in all areas of real estate including 1031 exchanges, finance, appraisals, inspections, contracts, marketing, bankruptcy and so much more. Please contact us today to learn more about our qualifications, services and to see how we can help make your real estate goals a reality. 

When we look at real estate market trends and put together predictions based on existing data, we typically look at how many homes have recently sold, how long they were on the market, how many new listings became available, how prices grow as well as economic trends in employment, etc. As we find ourselves in an unprecedented situation with a global pandemic that has affected every corner of our planet it’s difficult to make assumptions and predictions on where the real estate market is headed, not only for the remainder of 2020, but beyond. There is no doubt that the effects of COVID-19, Coronavirus, will be long lasting and will leave a significant impact on our country that will lead to a “new normal” way of living and doing business. All that being said, that doesn’t mean that the real estate market in Brazos County will come to a sudden stop. In this article we will review how COVID-19 has currently impacted the Texas real estate market, and what our thoughts are on how this pandemic will affect real estate in the long term. My real estate predictions in Brazos County for the next 10 years will share a general overview of how this current global situation will affect the behaviors and priorities of buyers, sellers and other markets that affect our business. 

As the whole world is adjusting to life under “safer at home” orders, it’s no secret that housing and real estate has seen a decrease in activity. This is mainly due to the fact that many sellers are anxious about utilizing traditional marketing techniques like open houses and allowing strangers into their homes for showings. Buyers are also more timid about making a large financial decision at an uncertain time when many are working from home, being furloughed or laid off and are unsure of the future of their employment. There have also been situations where homes currently in escrow end up having to push off the closing date because financing terms are changing. The question is how long will this slow down stick around for? 

The local real estate market was booming up until now, and the state of Texas has seen five consecutive years of breaking records when it comes to how many houses have sold and median prices. Additionally, no other state pulled as many building permits in 2019 as Texas. This will all change towards the second half of the year, and eventually once we find ourselves on the other side of the pandemic, we will begin to see long lasting effects and a change to the real estate industry and how we do business. 

Currently, virtual tours are becoming a very prominent practice when it comes to buying and selling real estate. In a recent blog post we reviewed how new technologies are affecting real estate, and we mentioned that virtual reality will continue to pick up speed and that many realtors will soon be tapping into this trend. Little did we know that just a month later the whole industry would be strongly dependent on virtual tours and video conference calls in order to complete a transaction. The beauty of our business is that it has always evolved alongside technology, and at Brazos County Realty we not only adapt quickly to new trends and technologies, but we aim to be ahead of the curve by learning about and implementing new practices early on. 

For the rest of 2020, we can expect to see a continued slowdown in activity until stay at home orders are lifted and people begin to get back to work. Social distancing guidelines will most likely stay in place for a while, which will affect how real estate is sold for the rest of the year. However, we may see an increase in houses listed for sale towards the end of this year as owners reevaluate whether they need to own additional investment properties, or others may consider downsizing in an effort to recoup income that was lost during the stay at home period. According to data and information shared by economic experts, house prices are not expected to drop the way that the stock market did – analysts expect prices to drop a little bit, but to remain steady. Future pricing on properties largely depends on the rate of unemployment and how motivated sellers will be when they are ready to list their homes for sale. Highly motivated sellers could mean that buyers who were waiting for the right time to buy a house and have been saving up for a down payment will be ready to pull the trigger on a purchase, which could also create a scenario for multiple offers and bidding wars if properties are priced to sell quickly. It’s difficult to comment on the immediate effects COVID-19 will have on the real estate market in Brazos County, recovery will likely be gradual as opposed to instantaneous and it is largely dependent on whether the virus will flare up again towards the end of the year. 

My real estate predictions in Brazos County for the next ten years are based on what we think will happen once the pandemic subsides. An economic crisis has long-lasting effects on the psyche of people as well as their check books. Buyer behavior will largely be impacted by their experiences during the outbreak, and trends will be dictated by what we have learned throughout this time. 

• Buyers will search for bigger homes with more square footage and open spaces. While trendy apartments and small homes seemed to be trendy for a while, many buyers will look to size up and expand their footprint in new homes. Whether this means that floor plans will become even more open concept than before, common living spaces will be more spacious or more walls will be knocked down is yet to be determined. From the COVID-19 pandemic we’ve seen that cities where buildings are built close together and residents live in small apartments, like in NYC, contributed to the spread of the virus, which in turn will lead to buyers searching for more space and distance from their neighbors. 

• The cost of construction and development of new projects will go up. We predict that there will be a shortage on building supplies, a slowdown of land acquisition, delays in the permitting process and new constraints and regulations to ensure construction workers remain safe and healthy. A shortage on new construction housing could result in lower inventory, higher demand and in turn drive housing prices up if they fall drastically during the Coronavirus recession. 

• Buyers will flock to suburban neighborhoods in an effort to find the perfect place to call home. While the pandemic won’t stop people from investing in real estate in large metropolitan areas like NYC, it may encourage buyers to seek out less dense cities where neighborhoods are more spread out and homes are larger. We’ve experienced a shift in how we do business and many people have been forced to transition to work from home remotely. This means that many people may decide that they don’t need to live in a dense urban setting, and while all of us are currently craving human interaction more than anything buyers will begin to favor suburban settings over a densely packed urban hot spot. Additionally, since many people are working remotely, they might not consider travel and commute times as much as they previously did when looking to buy a new home. 

• Outdoor living spaces & home offices will become a must-have for buyers. We’ve all been forced to take a crash course in working from home, which means that upgraded home office spaces and decked out backyards will become the newest must-have amenity. Balconies and private decks are already prized amenities for those looking into buying apartments, and after being stuck at home for a prolonged period of time buyers may realize that a nice outdoor space is a priority on their list of wants and needs. Home offices will also become a more standard offering, which means buyers may look for homes that offer more rooms and square footage to accommodate this space. Whether families continue homeschooling or both parents continue to work remotely, a nice home office will be a necessity in our new normal. 

• The idea of what “home” means will change. After spending months at home people are truly beginning to recognize the value of their home and how much it matters. During the global pandemic our homes transitioned from a shelter to the place where we eat, sleep, play, work and learn. Buyers will be attracted to properties that offer various amenities and upgrades that make staying at home more convenient, exciting and entertaining. 

We find ourselves in truly unprecedent times, which makes it very difficult to make predictions about the future. What we can say is that the real estate market has successfully withstood and overcome more difficult economic situations. Even though the immediate future is uncertain we are confident that the Brazos County real estate market will remain strong and resilient and that our team will provide top notch service to all of our clients. Please contact us if you would like to discuss a home evaluation or if you have questions about buying or selling real estate this year. 

There’s no denying that the world has seen an incredible technology boom in the last couple of years. Technology is absolutely unavoidable, and it is integrated into our daily routines as well as our homes, cars, offices and many other daily necessities. While some people may feel skeptical about the impact of technology on our lives, others embrace it with open arms. Even though change can be difficult to accept the main goal of new technologies is to ultimately make our lives easier and more efficient. One example would be the advancement in cell phone technology. Just over 20 years ago cell phones were not an item that every single person owned or carried around with them. If you needed to contact a friend or family member you would need to either do it from home or feed some change into a street phone – you would also need to know the number of the person you were calling and if they did not answer then you would just have to call back, there was no option of texting them and reminding them to call you back later. Fast forward to 2020 and the majority of the US population is glued to their smart phones 24/7. There are definite cons to the digital addiction we all fall victim to every now and then, but can you imagine your life without the comforts that new technology provides? 

Technology has not only changed how we interact and behave as individuals, but it has also significantly impacted many industries, real estate included. The evolution of real estate, as it has been with most other businesses, is technology driven. Even concepts that we may not think are influenced by technology are! For example, the majority of first-time homebuyers, as well as other buyers, begin their search for properties using online search tools. Whether they download an application onto their smart phone or utilize an online property search on an agent website this is how the process begins. Most real estate agents have also embraced the digital age by utilizing social media, email marketing and a wide range of other technology-driven platforms to communicate with clients and grow their business in their communities. 

So how are new technologies affecting real estate? Whether a buyer is looking for a home, a landlord is seeking new tenants, or an agent is marketing their business there is constantly new technology being introduced that is shaping the real estate industry. Although it’s tough to predict what will come next, there are a handful of technologies and real estate trends worth noting that are making a big difference in the way business is done. 

Internet of Things

One of the biggest ways that technology is altering the real estate industry is the popularity of the smart home trend. Smart home technology is a very generic term that is used to describe home automation that is used to improve certain things within the home including energy efficiency, security and general conveniences. The Internet of Things is very closely tied to smart home technology like the Nest thermostat, artificial intelligence assistants like Google Home or Amazon Alexa, smart water sprinklers, automated light bulbs, smart appliances and so much more. This time of smart home technology is not only convenient and cool, but it can help property owners boost the sales price of their home by anywhere from three to five percent. Additionally, homeowners who currently enjoy this technology in their home are more likely to look for and purchase a home with similar technology. New buyers are very interested in this type of home upgrade because it allows them to personalize their home and living experience based on their unique needs and lifestyle. 

Virtual Reality

Virtual reality isn’t just something that is used in gaming or those fancy buildouts in the middle of the mall – this is an important piece of technology that is making a big breakthrough in the real estate industry. Virtual reality makes it possible for an agent to show a property to an interested buyer who may not be able to visit in person. This can be used to take people beyond online photos and present an immersive, realistic 3D view of a home from whatever device they are using. This is one of the newest trends in real estate, but it is picking up speed quickly and it is one that many realtors will soon be using. Just imagine how much easier it would be for an out-of-state client to purchase a home before they move without ever stepping foot in the home. With virtual reality they can explore the property room by room in detail without leaving the comfort of their current residence. 

There are also additional benefits of this technology like aerial drone footage that allows a client to explore the neighborhood remotely, or virtual furniture that can help the client visualize an empty space without the extra expense of a staging company. This type of technology has the potential to increase the pool of buyers an agent can tap into, as well as speed up sales cycles by allowing clients to get a better sense of a property. 

The Cloud

Real estate professionals, as well as buyers and sellers are probably already using a wide range of cloud-based programs in a variety of ways. In terms of how this technology impacts the real estate industry – it can make the lending and closing process much simpler, faster and streamlined. Data from documents and listings can be securely managed and stored in a cloud system, and things like electronic signature capabilities can further facilitate faster deals. 

CRM Software

There is specific technology and software created like Salesforce, PipeDrive, Base and many other CRMS specifically for real estate professionals. A CRM is a Customer Relationship Management tool that helps to manage contacts, relationships and interactions with existing and potential customers. The goal of this technology is simple – to improve business relationships and help professionals stay connected to their clients, streamline business processes and improve profitability. A CRM created for real estate agents can help them keep track of emails, calls and the progress made with a prospective client. This allows the agent to have a clear understanding of their pipeline and quickly identify areas in their business where they need to take action. 

Blockchain Technology 

Blockchain technology is still in its beginning stages, but it is slowly being introduced into the real estate industry, and once it takes hold it’s going to be a complete gamechanger in the way business is done. Believe it or not, many home sellers are now accepting Bitcoin as an alternative payment option for high-value property sales. Blockchain technology makes it possible for people to process big financial transactions, like a sale in real estate, without going through a middleman like a bank. Once blockchain technology is fully implemented, if it is used properly it can bring security, efficiency and transparency to real estate transactions. Blockchain technology will also tap into smart contracts that will bring together a transaction completely between the buyer and seller, or renter and landlord. Removing the middleman and limiting interaction can actually speed up the transaction and reduce the chance for fraud.

As the world of tech continues to evolve and brilliant minds create innovative start-ups aiming to bring new technology to the market, we can continue to expect these high-level trends to break through into the real estate industry. It’s not easy to predict how new technology will be developed and how it will be implemented into the real estate industry, but it’s important to be aware of the changes and adapt as new technology becomes available. We live in a digital world and technology has the power to completely change the way we do business, which is why it’s important to keep up with the trends and maintain an open mind to the evolving business model. 

At Brazos County Realty we have an outstanding team of real estate professionals who are well-versed in all aspects of the business. We have been assisting clients with buying, selling and investing in real estate in the Bryan College Station area, and beyond, for more than 25 years. As our business has grown and progressed, we keep a vigilant eye on market trends, digital updates and new technology that helps us provide better service to our clients. Our website provides a wide range of tools, resources and informative articles that buyers and sellers can tap into. We also provide tools that allow you to search for properties for sale based on the criteria that matters to you, various mortgage calculators to help you estimate your monthly payments and comprehensive lists for local schools, attractions, utilities and so much more. 

If you’re looking to buy or sell real estate in Bryan College Station, please don’t hesitate to reach out to our team for help. We look forward to hearing from you and working with you soon!

Look on the bright side today. Instead of focusing on the things we can’t do while we distance ourselves from others to stay healthy while we try to contain the Corona Virus,
here are some things we CAN DO with a little extra time.

1. Call Grandma and Grandpa. They look forward to our calls and love to catch up. Help the children write a letter to them.
2. Make a loaf of bread or rolls with the kids. They love working with dough, and makes the house smell SO Good.  Share with a neighbor.
3. It’s almost spring and so beautiful in Texas. Work in the flower beds, plant flowers.
4. Spring cleaning and disinfecting.
5. You’ve needed to clean and organize the garage all year. Do it now.
6. How many times have you thought it would be fun to research your genealogy? Find your family.  Discover yourself.    Children love to know about their ancestors.  You could make a family tree. Bring to life your family’s history by exploring the lives of those that came before you.
7. Trim the trees.  A family that works and plays together… Stays together.
8. Plan your garden and start seedlings in trays to get a head start. Put each person in charge of their own flowers or vegetables. Make it a contest.
9. Play games with the kids
10. Exercise with the kids
11. Teach your kids how to sew on a button or fix a seam.
12. Go on a photo walk and take pictures of cool stuff outside.
13. Make and Fly a kite
14. Have a water fight outside.
15. Call a neighbor and tell them you’d be happy to take their dog for a walk.
16. Make a photo album with all those old pictures
17. Go for family walks
18. Make a time capsule
19. Make your own playdough. Look it up on Pinterest
20. Find a place to go fishing or just play in a creek. If you don’t have a creek nearby to play and splash in I’m so sorry. This is one of our favorite things to do in the spring and early summer. It’s also one of my favorite memories of my childhood. In College Station our family enjoyed the A&M Research Park off of 2818.
21.  Make a meal for someone else.
22. Connect with your neighbors and make sure they’re OK.  See if you can help in any way.
23. Practice the piano or an instrument.  Sing with the family.
24. Scavenger hunts are always fun.
25. Have a campout in the back yard.  Make smores.  Sing songs around the firepit.
26.  Last but not least, while the interest rates are so extremely low, log into your own personal portal on the multiple listing service from the Bryan College Station Board of Realtors and see all the wonderful new homes that you can finally afford to upgrade to.   Dream big.  If you can use more living space and want to talk to the best realtor about how to sell your home and buy something nicer, let Myke help you with your HOMEwork!  Just type in your basic criteria and see everything on the market that is currently available in your area.

Then call Myke:979-693-0201 for guidance.   We’ll make it happen together.

Myke Leatham
Brazos County Realty
www.CollegeStationHomes.com

There are so many incredible financial benefits to owning a home and to this day it is considered to be one of the safest long-term investments you can make. When you buy a home you almost immediately begin building equity, and you can also expect the property to increase in value over time as well. While there are various pros and cons in the debate of renting vs owning, one major benefit of being a homeowner is that if you live in the home long-term and eventually pay it off, you can look forward to living rent and payment-free when you get ready to retire. Home equity is not something to ignore as it is something that you can tap into if you need cash in an emergency situation, or it can even be a part of long-term retirement planning. 

Planning for retirement is extremely important – we all work very hard throughout our adult lives and it’s important that the work pays off during our Golden Years and that we can live happily and peacefully knowing our basic needs are taken care of. No matter what your financial plan for retirement entails all that matters is that you get started early and stay consistent with your contributions. There’s research and data out there that shows disappointing and scary statistics about individuals nearing retirement age who have less than $100,000 in savings. Even retirees who have been successful in saving and planning are still concerned about having enough because of the rising cost of medical care combined with increased life expectancy. A major component of wealth and retirement planning that is often forgotten about is home equity. There are various ways to factor in home equity into a retirement plan, but a reverse mortgage is a solid option that is ignored, and many retirees don’t know that it exists as a possibility or don’t understand how to take advantage of it. 

What is a Reverse Mortgage?

A reverse mortgage is a type of loan that allows the homeowner to withdraw a portion of their equity without having to repay the loan until they leave the house. One of the most popular types of reverse mortgages available is the Home Equity Conversion Mortgage (HECM), which is insured by the federal government. A reverse mortgage is an opportunity for owners over the age of 62 who own their homes outright or have a considerable amount of equity to tap into. The most common question in regard to a reverse mortgage is why anyone would want to borrow against a home that they worked so hard to pay off – why wouldn’t a retiree want to stay in their home and live there debt free? Instead, seniors facing retirement are more concerned with how they are going to afford their existing lifestyle once they retire and will no longer be cashing a consistent paycheck. A reverse mortgage provides a solution to this issue so that this group of individuals can enjoy a more financially secure retirement as they age. 

So, who is eligible to apply for or receive a reverse mortgage? The primary homeowner must be at least 62 years old in order to apply. Additional eligibility criteria includes:

• You must own your home outright or have a single primary lien that you hope to borrow against. 
• If there is an existing mortgage, then it must be paid off using the proceeds from the reverse mortgage. 
• You must live in the home as your primary residence. 
• The borrower must be current on property taxes, homeowner’s insurance and any additional obligations like homeowner’s association dues. 
• The borrower will need to take part in a consumer information session that is led by a HUD-approved counselor. 
• The property will need to be well-maintained and kept in good working condition. 
• The property in question must be a single-family home, a multi-unit property with no more than four units, a manufactured home built after June 1976, a condominium or a townhouse. 

If the above requirements are fulfilled, then you will need to work with your lender to work through the process of getting a reverse mortgage. One important note to keep in mind is that even if the property is completely paid off, you may not be able to borrow the full value of the home. The amount you can borrow, which is also known as the principal limit, will vary based on the age of the youngest borrower, current interest rates, the value of the home and the mortgage limit set for a Home Equity Conversion Mortgage. In general, you are likely to receive a higher principal limit if you are older, if your home is worth more and if interest rates are low. Borrowers will also have the opportunity to choose a HECM with a variable or fixed interest rate. With a fixed rate you will receive a single lump sum payment. If you select a reverse mortgage with a variable rate, then you can choose to accept:

• Equal monthly payments
• Equal monthly payments for a pre-determined amount of time that is agreed upon ahead of time
• A combination of a line of credit and fixed monthly payments for as long as you live in the home
• A combination of a line of credit and fixed monthly payments for a pre-determined length of time

The money that is borrowed as a reverse mortgage does not need to be repaid until the borrower passes, moves out or leaves the property for any reason. 

If you are interested in applying for a reverse mortgage the application process is similar to that of a traditional home equity loan. If you meet the eligibility requirements then you can shop around for the best deal and work with a lender to assess how much you can borrow. 

Can a Reverse Mortgage Allow you to Retire Sooner?

Now that we’re all caught up on what a reverse mortgage is and what the requirements are to qualify, let’s talk about the benefits and how you can use it as a tool to plan for retirement. More often than not, a reverse mortgage is used as a quick fix for cash or a last resort if all else fails. This Hail Mary mentality can be easily avoided by working with a competent and responsible financial advisor who can put an organized plan in place that includes long-term care planning, improving cash flow, mitigating returns risks in the event of a market crash and providing peace of mind for your Golden Years. An important piece of advice to keep in mind is that most people have no idea what they next three or five years of their life will look like, much less the next 20 to 30 years, so it’s impossible to plan with an open-mind and be flexible so that you can handle whatever life throws your way. 

Older homeowners are currently finding that they are sitting on record levels of home equity, and even though the upfront costs of a reverse mortgage can be quite high, they are finding it to be a very valuable tool for retirement. The best way to utilize a reverse mortgage as a tool to plan for retirement is to make your monthly payments to pay down your mortgage and gain more equity in your home. When you buy your home, if you are absolutely certain that you will live in this property forever, then you can count on the equity you build as a source of wealth when you retire. If you are unsure whether you will need a bigger or smaller home, if there is a chance that you have to move for work or family, or if there’s another reason that forces you out of your home then you won’t be able to depend on the equity you’ve built as a way to retire sooner. 

Many of us dream of retiring early, and even though the average retirement age in the US is 63 years old there are many Americans who are able to retire even earlier with careful planning. By starting to save early, being disciplined and creative you may be able to reach your goal of retirement sooner than expected. At Brazos County Realty we pride ourselves on providing our clients with the information and resources they need to make a well-informed decision regarding real estate in the Bryan College Station area. If purchasing and investing in real estate is part of your retirement plan, then please don’t hesitate to tap into our knowledge and give us the opportunity to help you achieve your financial goals. Our team boasts years of experience working with buyers, sellers and investors locating unique opportunities at favorable prices. Please contact us if you’d like to learn more about our featured properties for sale, or if you would like to discuss your long-term goals for real estate and how this could help you plan for retirement. We look forward to hearing from you soon!