Heather Goodwin ~ Shreveport Louisiana Real Estate

As reported in the January 19, 2009, issue of Louisiana Realtors® publication, eNews Digest, the National Association of Realtors® (NAR) is advocating an expansion of the first-time home buyer tax credit.

NAR's chief economist, Lawrence Yun, said, "A home buyer incentive is critical to help reduce housing inventory and stabilize home prices. The bigger the incentive, the faster housing can help pull the economy out of recession. The cost to the Treasury would be far less than the additional costs of a prolonged recession with insufficient housing stimulus."

The expansion they would like to see would include all home buyers in the $7,500 credit, do away with the repayment feature, and allow homeowners to use the credit as part of their down payment.

Their estimates show an additional 555,000 home sales, which they believe would be enough to meaningfully draw down excess housing inventory.

Leaving the current tax credit available only to first-time home buyers and requiring repayment over 15 years would translate into only 66,000 additional sales using NAR's estimate of only 1 out of 4 eligible households actually purchasing a home.

NAR's estimates do not take into account the impact of increased trade-up home purchases would make the home sales figures even higher.

This would be good news to Shreveport residents and existing homeowners who have been waiting on the sidelines for the right time to buy a home.

It has never been a better time than now to buy a home in Shreveport with more homes for sale, a slight decrease in home prices, and low interest rates. An all-inclusive tax credit would be icing on the cake.

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You're at Home with Heather
Shreveport and Bossier City, Louisiana Real Estate

Shreveport Home Connection
Coldwell Banker J. Wesley Dowling & Assoc. LLC

Serving your real estate needs in Shreveport, Bossier City, Benton, Haughton, Keithville, Stonewall, Blanchard, and Barksdale AFB

Licensed in Louisiana

Thanks to my associate, Marshall Graham, a lender with Aulds, Horne, and White for the following information to help you decide whether refinancing is right for you in your situation.

The question whether to refinance or not can seem overwhelming to most. After all, we're speaking of your number one asset! How does one know when the right time to refinance is? The mortgage industry is notoriously popular for statements such as, "My cousin Vinny said that you shouldn't refinance until a 2% reduction in rate". My intention is to shed some light into the mystery question, "When Should I Refinance?!"

The answer cannot be summed up as easily and as blatant as 1%, or 2% rate differential. Why? Because a 1/8th of a percent increase in the rate of a $10 million commercial loan is a lot bigger deal than a $50,000 residential loan! The size of the loan plays a very important role in determining the rate spread necessary. The following chart, based on loan size, may be used for quick reference:

$300,000 3/4%
$200,000 7/8%
$100,000 1%
$75,000 1.5%
$50,000 2%

Obviously, if two people at work are discussing whether to refinance that have two completely different loan sizes, the general statement of a 1 or 2 percent differential would be mathematically skewed. The client with a loan size of $300,000 with a 1.5% rate differential would far exceed the benefit of a refinance than a client with a $50,000 balance, because many of the closing costs associated with conducting the loan are fixed, not based on loan size.

The amount of closing costs plays a key factor in determining whether or not to refinance. After all, it wouldn't make sense to try to lower your payments $40 if your costs to do so were $9,000. It is here that one can determine a financial break-even point. The break-even point, which is defined as how many months and/or years must one reside in the property for it to be cost effective to refinance, is calculated by taking the total amount of closing costs and dividing that figure by the estimated payment reduction.

Break Even Point = (Total Closing Costs/ Est. Pmt Reduction)

The break-even point calculation assumes that only one variable is changing within the equation; the client is not moving from a 30yr to a 15yr term etc. Typically, we are finding our clients breaking even in 7 to 12 months.

Another important facet of refinances is based on the length of time one plans to remain living in the home. If a person plans on selling his or her home in 4 months, he or she definitely should not refinance. If you plan on staying in the property, (even one month) longer than the break even point, than you SHOULD refinance.

Lastly, much discussion is based on at what interest rate and when should one lock in. Personally, I am currently witnessing clients with a $200,000 + balance with a rate at 6.25%, whom would NEVER even consider purchasing a lottery ticket, not locking in at 4.75% with No Loan Origination Fee, because they are holding off for 4.25%?!? Are you serious? So what I'm being told is , "Marshall, a $188 reduction in my mortgage is not good enough...." Yet if that client continues to pay exactly what he's currently paying , but instead at a rate of 4.75%, the client would reduce the term by 8 ¼ years! ($2,256 * 8.25) = $18,657. Or, take that $18,657 and invest it at a rate of 5% in the following 10 years, and you just saved $31,909........the amount of your newborns college education. If the Haynesville Shale has taught us anything, it's that greed can lead to nothing in the end. An old saying in poker comes to mind, "It's better to win a small pot, than to lose a big one!"

Marshall F. Graham
Aulds Horne and White
318.869.4444
Marshall.Graham@AuldsHorneWhite.com

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You're at Home with Heather
Shreveport and Bossier City, Louisiana Real Estate

Shreveport Home Connection
Coldwell Banker J. Wesley Dowling & Assoc. LLC

Serving your real estate needs in Shreveport, Bossier City, Benton, Haughton, Keithville, Stonewall, Blanchard, and Barksdale AFB

Licensed in Louisiana

Heads up if you're financing your new home. One of the things the mortgage company will require is homeowner's insurance. Do you know how to get the best rate possible with the proper coverage? By asking the right questions and paying close attention to the details, you can be sure that you're getting all the discounts you qualify for. Below are some of the discounts insurance companies might give to policy holders.

• Do you have a current renter's or homeowner's policy with any company?
  • Having a current policy will lower the rate by up to 10%.
• What is the age of the home?
  • Newer homes have better rates. Up to a 20% discount.
• Does the home have a security system?
  • If is has a security system it will get a discount. If it is monitored by a company, the discount can be up to 20% off.
• Are you retired or a homemaker?
  • Retired persons over 55 and homemakers get a discount. Up to a 5% discount.
• Does anyone in the house smoke?
  • If no one in the house is a smoker, you receive a discount.
• How much is your mortgage balance?
  • Home owners are advised not to insure the cost of the land, just the home located on it. Land is not at risk of a loss.
• How much of a deductible can you afford?
  • The higher the deductible the lower the premium.
• What part of the city is the home located in?
  • Depending on the location of the nearest fire station and fire hydrant the premium can be lower.
• Do you have any previous homeowner's claims?
  • If you don't have any claims, there may be a Claim Free Discount.
• How good is your credit score?
  • Although, the credit score isn't the only factor in determining an Insurance Score, it is the largest factor. Basically, the better the credit the better the rating class for insurance.
• What is the main construction of the home?
  • If it is brick instead of siding it will have a better rate.
• Would you like to combine your home and auto policies together?
  • A multiple policy discount can help save you up to 30%.
• Does the home have any recent improvements?
  • A new roof, electrical system, plumbing or other renovations can get you a discount.
• Will your homeowner's insurance payment be escrowed?
  • If you escrow your insurance you can avoid up to a $60 per year charge for paper bills.
• How much personal property coverage do you need?
  • Some people don't need a large amount of coverage for belongings. Lowering this amount will save money each month.

These are just some of the discounts that insurance companies give to their clients, so be sure to ask about these discounts and whether there are any others you might qualify for to get the best premium possible. Thanks to Charles Semon of Semon Insurance Agency - All-State for this information. You can contact Charles here:

Charles M. Semon Jr. - Owner
Semon Insurance Agency - Allstate
charlessemon@allstate.com
318-861-2034 Office
We proudly serve all of Louisiana and Texas.

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You're at Home with Heather
Shreveport and Bossier City, Louisiana Real Estate

Shreveport Home Connection
Coldwell Banker J. Wesley Dowling & Assoc. LLC

Serving your real estate needs in Shreveport, Bossier City, Benton, Haughton, Keithville, Stonewall, Blanchard, and Barksdale AFB

Licensed in Louisiana

When you sit down with a real estate agent who wants you to sign a listing agreement with them so they can sell your home, be very careful. As I mentioned in my post, What's Your Listing Agent Really Doing For You?, there are three important blanks on that document that you should be aware of.

First, let’s talk about the length of the Listing Agreement. Most agents will want a six-month listing contract. Ask yourself if you are willing to work with that particular agent for six months while he/she tries to get your home sold. Do you need to sell your home more quickly than that? Whatever length of time you agree to, make sure you have a way to cancel the agreement with written notice to the agent.

Here’s a tip for you. Make sure the expiration date falls on a Monday. That way if the listing agreement needs to be extended (and it might in this economy), the agent won’t be calling you up on the weekend to get the paperwork signed.

Next is the Broker’s Compensation that you are going to pay to have your home listed. This is usually a percentage of the selling price. This is a negotiable number, but generally ranges from 4% to 8% here in Shreveport.

You can do the math, but be aware that this entire amount doesn’t go to the listing agent. Usually, the broker of the agent that brings the buyer receives half of that amount. The listing agent and buyer’s agent are then paid some portion according to their agreement with their brokers.

Perhaps the most important blank on the agreement is the List Price. Who determines this price? The seller? The agent?

In my last post I mentioned that the agent would be doing some work before meeting with you. Part of that work will be to determine what homes in your neighborhood have sold for recently and to determine the list price of homes currently on the market. These are two very useful pieces of information, and if the agent you are talking with hasn’t done this, be prepared to interview another agent or two.

I’ll go into more detail about how this information is used in my next post, You Said My House Is Worth What??

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You're at Home with Heather
Shreveport and Bossier City, Louisiana Real Estate

Shreveport Home Connection
Coldwell Banker J. Wesley Dowling & Assoc. LLC

Serving your real estate needs in Shreveport, Bossier City, Benton, Haughton, Keithville, Stonewall, Blanchard, and Barksdale AFB

Licensed in Louisiana

The original title of this post was, What Is Your Real Estate Agent Really Doing For You? The topic was too broad, however, because an agent can work with a client in one of two ways.

1. As a listing agent when you want to sell your home
2. As a buyers agent when you want to buy a home. I guess if you want to get technical, there's a third way.
3. If you're selling one home to buy another, and you use the same agent for both transactions - lucky agent. He or she is working for you in both these capacities.

So, do you really know what a listing agent does for you? Do you understand what they're doing to earn their commission? And do you understand just how much money they actually receive when you use their services?

The Basics

There are some basic things you should expect from your listing agent. These are things that must be accomplished to get your home on the market. They include:

• Explain and complete the Listing Contract with a purchase price decided by you
• Complete and review the MLS Data form (this is the information that will be entered into the MLS database)
• Have you complete the state-mandated Property Disclosure and Lead Based Paint forms
• Discuss the Showing Instructions
• Take Photos of the inside and outside of your house
• Install a Lockbox or alternate way for other agents to show your home
• Install the broker’s Yard Sign with flyer boxes and sign riders
• Enter the MLS Data and Photos to make your listing “active” in the database

That’s it. Looks like nothing more than filling out some forms and putting out a sign, right? Well, for some agents this is the beginning and the end of what they do to get your house on the market.

Trust me, though. There are several very important items in the list above that can make the difference between For Sale and Sold. Actually an agent’s work begins with the first call from you to set up a listing appointment. What happens between that phone call and when you are greeting them at your front door? That’s what the next post is about, so follow me to…

What’s So Important About The Listing Agreement?

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You're at Home with Heather
Shreveport and Bossier City, Louisiana Real Estate

Shreveport Home Connection
Coldwell Banker J. Wesley Dowling & Assoc. LLC

Serving your real estate needs in Shreveport, Bossier City, Benton, Haughton, Keithville, Stonewall, Blanchard, and Barksdale AFB

Licensed in Louisiana