Open House Bananza

It's about that time, Agents are getting ready, I hear someone is giving away Starbucks.....which home will you stop by first? Open House Bananza this weekend! Let's go house hunting! Click on the photo below for complete addresses, times and dates!

Rockwall Summary FYI

Provided By Trulia.com

Average price per square foot for Rockwall TX was $81, an increase of 28.6% compared to the same period last year. The median sales price for homes in Rockwall TX for Mar 13 to May 13 was $242,500 based on 1 home sales. Compared to the same period one year ago, the median home sales price increased 109.8%, or $126,900, and the number of home sales decreased 91.7%. There are currently 748 resale and new homes in Rockwall on Trulia, including 5 open houses, as well as 101 homes in the pre-foreclosure, auction, or bank-owned stages of the foreclosure process. The average listing price for homes for sale in Rockwall TX was $282,899 for the week ending Jun 05, which represents a decrease of 0.2%, or $447, compared to the prior week.

5 hidden costs of an expensive home

Provided By: Interest.com

While buying the biggest, most expensive home you can afford has traditionally been a mainstay of the American dream, buying more home than you need can add hundreds of dollars of unexpected expenses to your monthly budget.
Your real estate agent and your mortgage lender will talk to you about monthly principal and interest payments, but they’re probably not going to mention the hits you’ll take in your wallet and on your schedule when you move into a bigger home.
Before you start measuring the windows on your shiny new McMansion, consider these five reasons why bigger isn't necessarily better:

Reason 1. You'll trade your financial freedom for more bedrooms.
If you’re buying with a spouse or partner, the bank will use both your incomes to determine how much house you can afford. This locks both of you into working to pay the mortgage, which can be an issue down the line if one of you wants to stay home with children or switch into a lower-paying career.
Buying a smaller house that you can pay for with one income gives you freedom, says Jay Shafer, an advocate for small homes and owner of the Tumbleweed Tiny House Co., a California-based firm that designs and builds houses between 50 and 750 square feet.
"What you don’t spend in time paying for your house, you can spend doing things that you love," he says. "Instead of spending 30 years paying off a mortgage, you can have a life."

Reason 2. You're going to pay more to heat and cool your house.
A larger home costs means a bigger utility bill.
"A home buyer who doesn’t ask questions about heating and cooling a home could unintentionally stretch their total monthly household budget," says Douglas Robinson, spokesman for NeighborWorks, a network of nonprofit businesses across the country that help consumers make informed housing choices.
Reason 3. It will take longer, cost more to get to work.
Larger homes (or at least the kind that those us of who aren’t Donald Trump can afford to buy) are usually found in a city’s outer suburbs, so you’ll spend more money getting to and from work if your job is in the city core.

Suppose you move 10 miles further away from work to get to your new home. At 20 miles each day or 400 miles a month driving a car that gets 25 mph, you’ll pay $720 more per year per driver for gas — after tax — to live in that larger suburban home, Robinson says.

Reason 4. Homeowners insurance will take a bigger bite out of your budget.
The more your home would cost to replace, the more you’ll pay for a homeowners insurance policy. If you move into a flood zone, you’ll add a cost for that policy as well.

Before you put in an offer on a home, ask your insurance agent to estimate how much you’ll pay for coverage on the new house.

Reason 5. Say goodbye to free time.
A larger home typically comes with more property to maintain. Whether it’s cutting grass year-round in regions where it doesn’t snow or shoveling where it does snow, or raking leaves and trimming bushes and trees, landscape maintenance is a cost that can sneak up on you, whether you spend time to do it yourself or money to contract it out.

How much house can you afford?

Provided By: interest.com

If the last few years have taught us anything, it's this: Never buy more house than you can afford.
During the real estate boom, many agents and lenders were only too willing to help prospective homeowners find creative ways to finance homes that were beyond their means.
Too often, eager buyers went along. Today, millions of those owners have lost their homes. The real estate crash was a tough lesson in the importance of responsible financial planning when buying a house — the largest purchase most of us will ever make.
Wise home-buying begins with figuring out how much you can spend on housing and how much you should put into a down payment, then sticking with your plan despite the temptation to think “just a little bigger.”
It’s not hard.
Follow these 5 smart moves, and you’ll be in great shape to buy a house that fits your budget.
Smart move 1. Spend 28% or less of gross income.
For many years, a rough benchmark has prevailed when it comes to figuring out how much home a prospective buyer can afford. It’s called the “28/36 rule.”
The first half works like this: Your monthly housing costs, which include mortgage, insurance, property taxes and condo or association fees, shouldn't exceed 28% of your monthly gross income.
Add together all your sources of income — salaries, business income, anything else — before taxes, then multiply by 0.28 and you’ll have a good idea of where your housing costs should land.

Maximum housing costs

Annual income	Monthly housing limit
$50,000	$1,166
$60,000	$1,400
$75,000	$1,750
$100,000	$2,333

Some experts say spending less is even better.
Liz Weston, author of The 10 Commandments of Money, recommends keeping your housing costs down to 25% or less of your income.
Lenders also have grown more cautious since the housing bubble collapsed, and a few are now requiring that housing costs be kept as low as 21%.
If a lender's requirements strike you as too restrictive, shop around. Just don’t get carried away. Leaving yourself house-poor is a sure way to take the joy out of a new home.
Smart move 2. Hold your overall debt payment to 36% of income.
This is the second half of the rule. Your total monthly debt payments shouldn't exceed 36% of your gross income.
In other words, your mortgage, credit card bills, car and student loans, and other debts shouldn't break this barrier. To find out the amount, take your income and multiply by 0.36.
If you’re carrying more debt, you’re going to be able to purchase less home. For example, if you have a monthly income of $5,000 and no other debts, you should be able to swing a home payment of $1,400 (5,000 x 0.28).
But if you have another $600 in other monthly loan bills, that amounts to 12% of your income. This means you’re only going to be able to spend 24% (36 minus 12) of that income on housing, which comes out to $1,200.

How debt limits what you can afford

Annual income	Monthly debts	Monthly housing limit
$50,000	$450	$1,050
$60,000	$575	$1,225
$75,000	$625	$1,625
$100,000	$900	$2,100

It's easy to put these rules to work. Just enter your income and nonmortgage debt payments into our mortgage calculator, and we'll tell you how big of a loan and monthly payment you can reasonably handle.
Here’s a tip. If other debts are crimping your housing plans, take a year or two before buying a home and focus on clearing off some of those credit card or student loan bills. You'll be way ahead in the long run.
Smart Move 3. Determine how much you can put into a down payment.
The amount you can put down plays a big role in how much you can pay for your house.
Many lenders are requiring larger down payments than in the easy-money days of the past.
The average down payment for conventional, 30-year, fixed-rate loans used to purchase a home has held right at 21% to 22% for more than a year now, according to Ellie Mae Inc., a California-based mortgage technology firm whose software is used by many lenders.
Jim Merrill of Axel Mortgage Inc. in Phoenix says requirements have been loosening recently, with lenders willing to consider lower down payments for borrowers with excellent credit.
Still, the down payment can be a heavy burden for many buyers. One alternative is a government-backed FHA loan, which requires down payments of as little as 3.5%, or a VA loan, which can require no down payment at all.
But the more you can put into a down payment, the more house you’re going to be able to buy or the lower your monthly payments.
Ideally, the money you use should be savings you've set aside for a home. If you don’t have the cash on hand, however, you might have another option.

Smart move 4. Chose wisely if you tap retirement accounts for a down payment.
If you don’t have the up-front cash you need, an Individual Retirement Account (IRA) or 401(k) may be the only place you can turn for the money.
If that's the case, tap a Roth IRA or Roth 401(k) plan first.
Since contributions to Roth plans are fully taxed before they're made, you can withdraw what you've put into those accounts at any time without incurring penalties or additional taxes.
If you've held a Roth IRA for at least five years, you can withdraw an additional $10,000 in earnings without paying any penalties or taxes to buy or renovate a first home.
The next place to turn is a traditional IRA, which will allow you to withdraw up to $10,000 for the purchase of a first home without penalty. (If you have individual accounts, you and your spouse could take a total of $20,000.)
But since contributions to these accounts are tax-deductible, you'll have to pay income tax on withdrawals and a 10% penalty above the $10,000 limit until you reach age 59½.
Your employer's traditional 401(k) plan is the last place you should turn for a down payment. Such "hardship withdrawals" are fully taxed and incur a 10% penalty until age 59½.
The better option is taking out a loan against your 401(k). You can usually borrow up to $50,000 or half the value of the account, whichever is less. Your employer can give you up to 15 years to repay the loan, if it’s for a home purchase.
Monthly payments are deducted from your paycheck. The interest you pay, generally a couple of percentage points above the prime rate, goes into your retirement account.
But now you're talking about a new loan payment that will reduce the amount you can borrow for a home. You’ll need to go back to Smart Move 2 and recalculate.
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Homes are truly affordable in only about half of the nation's largest cities. Our new study found that buying a house is still a pricey proposition in many places, despite the big drop in prices and record-low mortgage rates. We grade the top 25 cities in our Fall 2012 Home Affordablity Study, and a couple of popular West Coast towns get slapped with an "F." Did your town pass the test?
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Smart move 5. Take into account the overall cost of moving into a new home.
Buying a house comes with a big after-purchase temptation. You want to make it as nice as possible. It's easy to go a little crazy on new furniture and decorations.
When you’re applying for a mortgage, you’ll find your personal finances carefully scrutinized. But once you've bought a house, it's up to you to maintain discipline. It can be easy to run up your credit cards buying new stuff.
If you do so, you’re putting yourself in the same hole you did all your original planning to avoid.
Even if you remain frugal, you’re going to end up buying a few things, drapes or pieces of furniture, once you settle in. If you’re planning to do some remodeling, you’ll be spending even more. Try to take these costs into account from the beginning.
You’ll also want to hang on to some cash for an emergency fund, and Weston recommends budgeting 1% to 3% of the cost of your home for annual repairs and maintenance.
Yes, this is hard when you’re buying a house. But you never know when disaster might strike, and that mortgage payment will be easier to make when it does if you've left yourself a cushion.

Should you lend your child money to buy a home?

Provided by: interest.com

Your baby is all grown up and ready to buy a home.
Sally (or John) could go to a traditional lender to get a mortgage. Or she (or he) could turn to the Bank of Mom and Dad.
Should you lend your child money to buy a home?
Becoming your child’s lender can be financially beneficial, but it's also fraught with risk — perhaps more so than the typical investment because a family relationship is involved.
If Sally or John defaults, you have to foreclose on your own child.
Can you handle that?
On the other hand, you can earn close to 3% or more on a long-term loan, which is considerably more than what a savings account or certificate of deposit pays.
And your child will save on closing costs, private mortgage insurance and interest, because the cheapest traditional 30-year loans charge well more than the rate you could offer your child.
Most parents don't lend their children money to buy a home, but it's not unheard of.
According to the National Association of Realtors, 6% of first-time home buyers in 2012 received a loan from a friend or relative, typically their parents, to help purchase a house.
If you’re considering lending your child money, here are 5 facts you need to know.
Fact 1. Lending money to your kids can be a cause of conflict.
The single most important consideration is whether you can afford to have your money tied up in a loan for an extended period.
"Generally, families that are able to provide mortgages for their children have greater wealth," says Jeff Nauta, a certified financial planner and principal at Henrickson Nauta Wealth Advisors in Belmont, Mich.
If you think you'll rely on the mortgage payments to finance your own retirement, then late or missed payments can put you in a tough situation.
You know your child. Make sure she or he is already financially independent before considering a loan. You should not be the bank of last resort.
"The parent-child relationship may become strained when you loan the money and are not repaid correctly or the child is constantly paying late or buying things that the parent feels are improper or causing late payments," says Tim Gagnon, assistant academic specialist of accounting at Northeastern University’s D’Amore-McKim School of Business in Boston.
"But," Gagnon says, "can you foreclose on your child, can you evict your child and will they see you as the first payment they should make each month?"
Fact 2. You must follow the government’s rules to avoid the gift tax.
If you want to lend your child a large sum, you have to do it right to avoid incurring gift tax liability.
First, you must properly document the loan.
"The parents are going to have to work with a title and escrow company to create the required deed of trust documents and record these with the county in which the residence is located," says Kevin Gahagan, a certified financial planner and principal of Mosaic Financial Partners in San Francisco.
The child should also sign a promissory note that details how the loan is to be repaid, says Gregory B. Meyer, community relations manager with Meriwest Credit Union in San Jose, Calif.
You would want to formally record the transaction even if gift tax wasn't an issue.
This step protects your loan interest and your interest in the property, Meyer says. "Without it, should your kids fail to pay, your ability to get repaid through the trustee sale or foreclosure sale of the home could be compromised."
This formal loan document should state the loan’s interest rate, term and transferability, Gahagan says. It should also include an amortization table showing the balance remaining and equity accrued at any point in the loan’s lifespan.

Applicable Federal Rate

Month	Rate
December 2012	2.38%
January 2013	2.29%
February 2013	2.49%
March 2013	2.63%
April 2013	2.67%
May 2013	2.57%

To determine what interest rate to charge, you’ll need to go to IRS.gov and look up the "applicable federal rate" for the month and year in which you finalize the loan.
For May 2013, the applicable federal rate for long-term loans is 2.57% if the interest is compounded monthly. That's about a percentage point less than the average 30-year mortgage interest rate.
There are significant (and complicated) tax consequences if you don’t charge at least this amount.
Gift tax issues also come into play if your child defaults on the mortgage.
If parents forgive the loan or don't pursue collection actions, the IRS may consider it a gift, Gagnon says, and if the loan is forgiven, the child may have to report it as income and pay tax on it.
For 2013, the annual gift tax exclusion is $14,000. This amount applies to each recipient, and each spouse can gift this amount tax-free.
The maximum amount parents could give a child without incurring gift tax liability would be $56,000 if each parent gave $14,000 to both their child and the child’s spouse.
Even the maximum amount is far less than most mortgages.
Fact 3. You also must follow rules to deduct mortgage interest.
Following the steps to avoid the gift tax will get you most of the way toward making sure your child can deduct mortgage interest payments.
Here are the additional steps:

• The parents must file IRS form 1098 to report the interest they received from the loan over the course of the year.
• They should provide a copy of this form to their child so the child knows how much interest to claim as a tax deduction on his or her tax return.
• The parents also must declare the interest reported on form 1098 as income on their tax returns.

Fact 4. There are companies that can help you formalize your loan agreement.
A third-party financial institution can simplify the loan process and increase the likelihood your child will pay you back.
One such intermediary is Boston-based National Family Mortgage, which has handled more than $81 million in loan volume while keeping more than $36 million of interest within families.
Some 85% of National Family Mortgage’s loans are between parents and their adult children. The average loan is for 23 years at a fixed rate of 3.27%.
The company says the default rate is less than 1% on the loans it manages.
National Family Mortgage also can help parents and children manage a mortgage with its loan servicing option, which will send a monthly statement and payment reminders, provide electronic payment processing and online account access, and establish an escrow account for property taxes and insurance.
Fact 5. This type of loan won’t show up on credit reports.

7 smart moves to boost your credit score:

• Correct any errors on your credit reports.
• Pay all your bills on time.
• Use every credit card you own.
• Pay down your credit card balances.
• Don't apply for credit on a whim.
• Get repaid debt removed from credit history.
• Have someone add you to their card.

A loan between family members cannot build or damage the borrower's credit because it is not reported to credit agencies.
Parents can’t report the loan to the credit bureaus even if they want to because TransUnion, Experian and Equifax have rigid, cumbersome and expensive reporting requirements that few family lenders can meet, according to Tim Burke, the CEO of National Family Mortgage.
The agencies also have legitimate concerns that intrafamily loans could be abused to help a borrower build credit, Burke says.
If a child missed a mortgage payment, the parent might be tempted to grant amnesty by informing the credit agencies that no payment was due.

Moving? What to Leave Behind

Provided By: Realty Times

Congratulations on selling your home! Now comes the "fun" part of packing up all those clothes, toys, and pots and pans. It's a lot of working rounding up all the items you need to take with you, but what about the things that stay behind?


There are items that you are either contractually obligated to leave or those that would be kind to leave the new owners.

Let's take a look at these leave-behind items.

Appliances: Leaving appliances behind may have been part of your sales contract. This can range from the refrigerator and dishwasher to washer and dryer. It's important that you follow these contractual agreements exactly.

Manuals: Be sure to leave the new owners a folder full of all appliance and system manuals. This will make their transition into a new home a breeze.

Extra Keys: Even though many homeowners will change their locks, you may have extra keys laying around for sheds, front doors, and garage doors. Consider leaving these behind. You'll have no use for them and the new owner may appreciate not having to make copies right away.

Security alarm and garage door codes: There's nothing more frustrating than having a fancy garage door with code access ... and no codes or manual for resetting. Be kind and leave behind either the manual or instructions!

Warranty Information: Your home warranties will transfer to the new owner upon sale of the home. Leave all this information behind.

Service Contacts: It takes new homeowners a while to get their bearings. There's a lot of services that need to be signed up for. If you have recommendations for lawn care, pool service, and even handymen then leave those contact numbers behind on a sheet of paper. This will save the new owner a lot of legwork!Finally, it's important to not leave behind loads of junk and clutter for the new homeowner to sort and discard. Try and leave the home clean and ready for the new owner. They'll appreciate the fresh start you're offering.
Moving is an exciting time! Spread the moving karma by leaving behind all important pieces of information and maybe the seller of your new home will do the same!

Why The 30-Year-Fixed Mortgage Rate Should Be Below 3%

Ben Bernanke, Chairman of the Federal Reserve, must be tearing out what's left of his hair.


He has increased the Federal Reserve's balance sheet to an all time high of almost $3 trillion, primarily through bond purchases.

Unfortunately, mortgage rates haven't declined as much as he would have hoped.
He is frustrated that the lower yield on mortgage backed securities are not being passed onto borrowers in form of lower mortgage interest rates.

He recently said the situation is "unfortunate" and the Federal Reserve Bank of New York conducted a workshop to examine the issue.

Imagine the 30-year-fixed-rate-mortgage interest dropping below 3 percent?
That would generate another wave of refinancing, helping homeowners across nation save hundreds to thousands of dollars each year, while boosting the economy.
Bernanke hoped the savings would increase consumer spending and provide the economy and employment with a much needed boost.

Why the 30-year-fixed mortgage rate should be 2.75%
The spread between so-called primary and secondary rates is about 1.1 percentage points, compared with less 0.7 percentage point in March and an average of about 0.5 percentage point years before the credit crisis, according to Bloomberg.

Primary rates are what lenders charge borrowers and secondary rates are what lenders are paid when they sell the loans on the secondary market. If the spread was at the pre-credit crisis level of 0.5 percent, mortgage rates to borrowers would decline by 0.6 percent.
Today, the current average 30-year-fixed mortgage rate is just below 3.40 percent, which means the rates should be at or below 2.80 percent.

Some say the higher spreads today reflect bank profiteering.
In early December, a study from the New York Federal Reserve Bank reported that banks earn about $5 per $100 in loans they originate today, up from $4 in 2009 and $2 from 2005-2008.

Why mortgage rates aren't lower
Banks have their own explanation for the disparity.
Bernanke concedes, higher fees charged by Fannie Mae and Freddie Mac and other banking industry changes are contributing to higher spreads. Banks today also experience the added cost of longer processing times.

Banks understand that low mortgage rates won't last forever. That makes them reluctant to add more staff, which would increase their fixed costs. Short-staffing results in longer loan processing time and, again, time is money.

Tighter underwriting guidelines also contribute to longer processing times. Banks analyze many more income, asset and credit documents then they have in the past.

Mortgage industry officials also say that rising litigation expenses, federal and state investigations and new regulations contribute to a cost structure that is difficult to predict.

"Until we have a rational, articulated plan where institutions know they can extend credit in a way that protects them as well as the consumer, I think we're going to see these spreads stay wide," said David Stevens, chief executive of the Mortgage Bankers Association.

Critics say banks have too much business and too little competition. The law of supply and demand rules. With more business than they can handle, there is little incentive for them to reduce rates.

Once these low mortgage rates begin to rise and refinancing business dwindles, the spreads could narrow. Few complain about a 3.5 percent mortgage rate, but economic and employment gains would be greater if banks made smaller profits and allowed rates to fall below 3 percent.
That's Bernanke's goal.