Dallas Fort Worth Homes and Real Estate for Sale: December 2009

Here's some good info from Ashley Myers about the FHA 203K loan program.  I did several of these during my years as a lender and still think it's a great program for owner-occupant buyers looking to rehab a property.

Below is a list of property tax rates for cities in the Dallas Fort Worth metroplex listed in order from lowest to highest tax rate.  These tax rates are for tax year 2009 and will apply to taxes due at the end of 2009.  Tax rates may change every year, so it is important to compare rates for the current year.

This list covers six counties in the Dallas Fort Worth area: Dallas County, Tarrant County, Collin County, Denton County, Rockwall County and Kaufman County.

Since many of these cities lie in different counties and school districts, the tax rates may vary slightly from what is shown here.  Cities marked with an asterisk (*) are known to lie within multiple counties and school districts.  Some other cities may also lie in multiple districts as well.  Some cities are listed more than once if they lie in multiple counties.

There are several factors that determine the final amount of taxes that a home owner may have to pay besides just these tax rates.  The exemptions offered for each city, school and county taxing entity vary significantly.  For more information about how property taxes work in the State of Texas, please check out my article about how property taxes are determined.  

The information on this list was obtained by third parties.  While I have made an effort to ensure it is accurate, I do not make any claims or warranties as to the accuracy of the data presented.

The Kaufman County property tax rates for 2009 have been released by the Kaufman County Central Aprpaisal District.  These tax rates will apply to property taxes due by the end of 2009. 

Below is a list of cities in Kaufman County with their respective property tax rates.  Tax rates on this list only apply to cities within the borders of Kaufman County.  Some cities may lie in different counties and possibly even school districts, so please verify tax rates for individual properties through the Kaufman County Central Appraisal District.

Please note that I obtained this information from third parties and cannot guarantee or make any warranties as to its accuracy.  Please verify tax rates with the appraisal district.

Here's a list of the Collin County Property Tax Rates for 2009 listed in order of lowest to highest by city.  These 2009 tax rates for Collin County were just recently released by the Collin County Central Appraisal District.

Property tax rates are a sum total of the county, city and school taxes for each taxing entity.  It's important to note that some of these cities may lie in multiple counties and school districts, so the tax rates shown here may be different in cities that either lie outside of Collin county or that lie in multiple school zones.

While the property tax rate is certainly an important factor to consider when purchasing a home, I do not recommend that home buyers choose a city based solely on the tax rate.  There are plenty of other factors to consider besides just the tax rate.  This is simply meant to be a guide for home owners and perspective buyers who are curious about the cost of home ownership in various cities in Collin County.

This information was also provided by third parties, so i can make no warranty as to the accuracy.  Please verify the tax rates with the Collin County Central Appraisal District. 

Beginning January 1, 2010, residential heating, ventilation and air conditioning (HVAC) manufacturers will have to cease production of equipment that runs on R22 freon refrigerant as part of an international agreement signed by the United States.

In 1986, a group of nations signed the Montreal Protocol to gradually phase out CFCs (Chloroflorocarbons) because of their damage to the environment and the ozone layer in the atmosphere.  Initially, R12 freon, the refrigerant that was previously used in automobile air conditioning systems, was phased out.  The continued phase out will now begin to affect residential HVAC units starting in a few weeks.

HOW WILL THIS AFFECT HOMEOWNERS?

Homeowners who have HVAC units that run on R22 freon may not be able to find replacement units after January 1, 2010.  However, repair and replacement parts for the units may continue to be available for a long time.  The person I refer my clients to for HVAC repair, Tim Bob (yes, that's his last name) recently mentioned that many of these units are becoming harder to find even at this point.  Tim recommends that all homeowners who may be having issues with their HVAC units attempt to have them serviced and/or repaired as soon as possible.  Tim Bob's number is 214-762-2598 and he provides air conditioning and heating sales and service to the majority of the D/FW area.

HVAC units consist of several components.  The two main components are the evaporator coil (inside unit) and the compressor (outside unit).  In situations where either the inside or outside unit has failed completely and must be totally replaced, the other unit may be retrofitted to run in compliance with the new requirements in many cases. 

What about homeowners who have units that run on R22?  Will they have to upgrade them if they need to have freon added? 

NO because the current phase out only requires companies to cease manufacture of R22 equipment.  The law does not eliminate the manufacture of R22 freon until the year 2020, so current equipment that runs on R22 can still be serviced with new freon.  However, if the unit fails completely and must be entirely replaced, the new unit will have to be one that does not run on R22.

Call Tim Bob today for your heating and air conditioning (HVAC) needs in the Dallas / Fort Worth area.  His number is 214-762-2598.  

I have a past client who lives and works in the Arlington - Tarrant County area that is looking to meet some homeowners and/or real estate agents with clients in need of general home repair work and maintenance.  He is also interested in building up a business of people that may need regular yard and lawn maintenance. 

Here's a list of the type of work he has experience with and prefers to do:

• General lawn care and maintenance
• Building and repairing fences
• Sprinkler system repairs.
• General handyman work. 

If you or any of your clients need some work done, please call Brandon Jeffries at 832-477-4019. 

Here is a list of the Denton County Property Tax Rates listed by each city in order of lowest to highest.   The 2009 tax rates were recently released by the Denton County Central Appraisal District. 

Property taxes in Denton county, as is the same in every county in Texas, are determined by three main factors: The city tax rate, the county tax rate and the school tax rates.  Each tax rate is set by local officials based on their budget for the following year. 

While this data can certainly be helpful to potential homebuyers who want to compare the cost of living in different cities, I strongly recommend not choosing a city based solely on the tax rate.  Quality of services and schools should also be considered, as well as other factors such as commute times factors that may affect cost of living or contribute to the overall quality of life. 

In addition to the tax rate, each county appraisal district will have an appraised value for each home.  This factor can also have a significant impact on the actual amount of taxes due for a specific home.  Counties allow homeowners to protest their tax value once per year, but not until they actually become owner of record.  In other words, a potential homebuyer cannot protest the value of a home prior to actually taking ownership.

Some of the cities listed below may lie in multiple counties and school districts.  Therefore, please assume that each tax rate only applies to properties located in Denton county.

* denotes a city that lies in multiple school districts and may have varying tax rates.

I have made an effort to ensure this data is accurate, but this was obtained from third parties.  I make no claims or warranties as to its accuracy.  Please verify these tax rates with the Denton County Appraisal District.

The Denton County property tax rates for 2009 have been released by the Denton County Central Appraisal District.  Below is a list of cities in Denton County and their respective tax rates.  There are many cities on this list that may also lie in other counties, but the tax rates shown on this list only applies to property in those cities that lie in Denton County.  The county tax rate will be different in cities that lie outside of Denton county.

The 2009 tax rates will apply to taxes due on December 31, 2009.  Homeowners and their mortgage companies should have already received their tax bills from Denton County. 

Cities that are served by more than one school district are marked with an (*). 

* Denotes cities that are in multiple school districts. 

Every effort has been made to ensure the accuracy of this data, but I make no warranties or guarantees as to its accuracy.  This information was obtained by third parties.  Please verify this data with the Denton County Central Appraisal District. 

Most renters that want to buy a new home will often wonder when the right time is for them to start looking for a home.  Ultimately it's their decision, but I certainly have some recommendations that might be helpful. 

Here are a few key points that I feel all renters should understand about buying a home:

• Their first mortgage payment is usually not due until 30-60 days after closing.
• Renters should consider giving themselves some time to move out and make any desired repairs or updates to the home prior to moving out of their rental home.  Also, delays sometimes occur with the home purchase process that might be outside of everyone's control, so I strongly urge buyers to consider giving themselves a "buffer zone" of time in case a delay occurs.  Furthermore, all renters should consult with their landlord to find out what options they may have to extend their stay in case of unexpected delays.
• Some types of transactions, such as foreclosures and especially short sales, can take longer to close than purchasing directly from an owner that isn't in distress.  Renters should consider the potential time it will take to close a transaction to avoid becoming "homeless" for a period of time or consider eliminating these seller types from their home search if a closing delay would cause significant problems. 
• Despite the weak economy, homes that are in good condition are selling very quickly in many parts of D/FW, so spending a lot of time touring homes before a buyer is within a reasonable time of being able to sign a contract doesn't make much sense. Many of the best homes will quickly be gone and the best homes on the market usually require quick action on the part of a motivated buyer to compete with other buyers that may be bidding on the same home.
• Getting pre-approved for a mortgage should always be the first step before looking at homes.  Mortgage guidelines have changed significantly over the last few years, and a good credit score does not always guarantee a buyer will be approved for a mortgage.  Furthermore, it makes much more sense to know your options, including the expected cost of down payment and the monthly payment, before falling in love with a home that won't fit the budget. 

Aside from these points to ponder, there may be other factors to consider depending on a person's individual situation. 

The fact that most lenders will not require the first mortgage payment to be paid for 30-60 days after closing is often a surprise to many renters.  Rent is typically paid in advance, whereas mortgage payments are typically paid one month in arrears.  For example, a renter who pays their rent on March 1st is paying for their rent for the month of March, whereas a homeowner who pays their mortgage payment on March 1st is actually paying interest for the month of February.  The interest for the days of the month in which a buyer closes is typically collected at closing and is part of the closing costs that are included on a lender's good faith estimate.  Sometimes we can negotiate this cost to be paid by the seller, as well as some of the other closing costs.  Each mortgage has its own specific set of guidelines regarding the amount of closing costs that can be paid by the seller. 

Because of this 30-60 day delay from the time of closing until the first mortgage payment is due, many renters may sometimes discover they have overbudgeted for expenses.  This will often allow them take some extra time to move without having to be out of their rental home on the same day as closing.  Unfortunately there are sometimes delays in closings that may be completely outside the control of everyone involved, so having an extra week or two might save a renter from being temporarily "homeless" in case this happens.  And regardless of that, many renters would love to enjoy a stress free move and have some time to update and make repairs to their new home before they move in.  Remodeling a vacant home is much less stressful than remodeling a home full of furniture, pets and children!

Everyone's individual situation is different, so contact me today so we can design a strategy for you that will give you the best chance of making your home purchase experience a good one! 

Since the beginning of the financial crisis, several significant changes have occured with mortgage guidelines.  A summary of these mortgage guideline changes is imperative to helping consumers understand what changes that have taken place over the last few years may affect their ability to obtain a new mortgage loan. 

Contrary to popular belief, the guideline changes have involved a lot more than just higher credit score requirements.  In fact, one could argue that credit scores have perhaps been the least significant factor that has changed.   This assumption is perhaps my biggest reason for writing this article.  Many buyers I encounter today, especially those who monitor their credit score and know they have good credit, are under the false impression that mortgage guidelines are essentially the same as they were a few years ago with the exception of higher credit score requirements.  This leads them to assume that they will automatically be approved for a loan. 

Perhaps they were able to obtain a mortgage quite easily a few years ago, or perhaps they simply do not understand that credit score is only one of a long list of factors that mortgage lenders consider.  The main reason for their misunderstanding is because the media has oversimplified the complexity of the mortgage crisis and constantly portrays it as being caused by "banks giving loans to people with bad credit".   So it's logical to most people to conclude that credit score requirements have been the only factors that have changed. 

Unfortunately this is far from the case.  That doesn't mean that it's impossible to get a loan nowadays, but buyers need to be aware of the other changes that have taken place with mortgage guidelines.  Simply having a good credit score no longer guarantees a loan approval like it did a few years ago. 

The subprime mortgage market at one point made up more than half of the mortgage market in the US.  Today, it accounts for just a small percentage.  Fannie Mae, Freddie Mac and Ginnie Mae now account for over 90% of the mortgage market, with the remaining share consisting largely of jumbo loans held in bank portfolio and hard money loans, which are private mortgage loans made by a variety of different entities. 

In other words, FHA, VA, USDA and Fannie/Freddie Conventional loans are about the only game in town, aside from jumbo loans and the small share of hard money lenders that make loans on their own terms.  Of course, hard money lenders usually demand much higher fees and interest rates than the government agencies since they are able to provide a loan when nobody else will. 

The government agencies guarantee loans made by banks, they do not loan the money themselves directly to consumers.  But they purchase the loans from the banks once the loan has been made to the consumer.  So banks will typically not lend outside of these guidelines since they do not wish to hold these loans on their books.  They would rather transfer the risk and make loans to new customers by sellling them to Fannie Mae or Freddie Mac.   

Here's a summary of changes that have taken place in mortgage guidelines over the last few years:

MOST SIGNIFICANT CHANGES:

ELIMINATION OF VIRTUALLY ALL STATED INCOME AND NO DOC LOANS

Stated income loans were originally designed as a way to simplify the mortgage approval process for self-employed borrowers who had to provide a significant amount of paperwork (tax returns, etc).  Over the last several years, many lenders dropped the down payment requirement for stated income loans from 20% all the way down to 0% while at the same time eliminating the requirement to actually verify the borrower had a business in the first place. 

Then came "no doc" loans, where the borrower simply had to provide their name and a social security number.  At one point, a buyer with a 680 credit score could purchase a $750,000 home with no money down with no verification of employment, income or assets.  Needless to say, these loans mostly resulted in foreclosure and massive losses to the investors. 

WHAT'S DIFFERENT NOW?

Most states have passed laws that completely outlaw stated income loans.  Furthermore, banks realize that loans made to individuals that can't document their income through traditional means (W-2's, tax returns, etc) have a much higher instance of foreclosure.  Fannie Mae no longer purchases stated income loans.  The only option most homebuyers have who can't document their income is to seek financing from a hard money lender who is willing to take the higher risk.  The rates and fees are typically much higher than government insured loans. 

MANY 100% FINANCING PROGRAMS HAVE BEEN ELIMINATED

A few years ago, subprime loans allowed buyers with credit scores as low as 560 (in some cases 500) to obtain a 100% loan.  Also, there was a loophole in the FHA guidelines that allowed buyers to obtain a "gift" from the seller to circumvent the 3% down requirement.  Fannie Mae also had a variety of 100% loan programs. 

WHAT'S DIFFERENT NOW?

Fannie Mae now requires a minimum of 3% down.  FHA down payment requirements have been increased to 3.5% and the loophole allowing sellers to pay their down payment has been eliminated.  100% subprime loans have been gone for several years now, and 100% stated income loans have been retired to the graveyard of history. 

PROGRAMS THAT STILL ALLOW 100% FINANCING include the USDA loan program and the VA loan program.  Some government grants also may be used for down payment, but these usually have very strict income requirements.  The USDA loan has some specific loan guidelines and, more importantly, geographic restrictions.  100% VA loans are still available to qualified veterans.  And surprisingly, the guidelines for VA loans have changed very little.  This is likely due to the fact that VA analyzes income more closely than other types of loans, which has led to fewer losses compared to subprime and conventional loans.   

GUIDELINES FOR BUYERS WHO WANT TO KEEP THEIR CURRENT HOME AS AN INVESTMENT PROPERTY, SECOND HOME OR SELL THE HOME AFTER CLOSING ON THE NEW ONE

A few years ago, most buyers who wanted to purchase a different home (move-up) or even downsize to a smaller home would simply lease their current home and provide a copy of this lease to their lender to offset their mortgage payment.  Then once the foreclosure crisis picked up steam, lenders began to notice that a significant amount of foreclosures were occuring on homes where buyers had purchased another home and simply let the first home go into foreclosure.  This was even happening on many buyers who had perfect credit.  This tactic, known as "buy and bail", began causing a massive amount of losses to mortgage companies.  Even many buyers who intended on keeping their home as an investment property or who were planning to sell the home shortly after closing on the new one began falling behind because of a slowdown in the market. 

WHAT'S DIFFERENT NOW?

Homebuyers who want to keep their current home may not be able to simply show a lease to offset the payment.  Fannie Mae, in most cases, requires the buyer to prove they have at least 30% equity in their current home in order to offset the current payment with a lease.  They also may be required to show at least six months payment reserves for both the current and new home.  FHA also requires 25% equity, unless certain conditions exist (such as moving to an area that's not within reasonable commuting distance).  Proof that the first month's rent and/or security deposit has been obtained is often required as well.  Homebuyers that are upside down on their current home or who do not meet these equity requirements may still be able to obtain a new loan provided they qualify with both mortgage payments. 

RESERVE REQUIREMENTS

During the subprime boom, many lenders relaxed or completely eliminated requirements that borrowers have reserves in the bank after closing.  Statistically, buyers are much more likely to have problems paying their mortgage without at least some cushion to fall back on in case of a financial hardship, such as job loss, etc. 

WHAT'S DIFFERENT NOW?

While most loans do not have specific requirements for reserves, some lenders now require reserves for buyers with lower credit scores, as well as in certain situations where the overall risk of default may be higher.  A good example is buyers that are keeping their current residence, as described above.  In general, buyers who have little or no reserves will find it harder to obtain a mortgage. 

DEBT TO INCOME RATIO LIMITS

The debt-to-income ratio is defined as the ratio of total monthly obligations compared to total gross monthly income.  So a homebuyer who makes $5000 per month but has $2500 per month in debts, including the proposed new house payment, would have a debt ratio of 50%.  Debt ratio requirements during the subprime boom were often allowed to exceed 60 or 70% and were completely ignored in many cases. 

WHAT'S DIFFERENT NOW?

Fannie Mae recently changed their maximum debt-to-income ratio to 45% from 50%.  Many lenders may also have an arbitrary requirement regardless of whether or not the loan program guidelines do or not.  The automated underwriting systems have tightened the maximum debt-to-income requirements in many situations.  While credit score may help to increase a buyer's allowable debt ratios, having a high credit score alone does not guarantee an approval. 

OVERLAY (ARBITRARY) GUIDELINES

This is perhaps becoming the most significant change that is affecting many loan applicants.  An overlay guideline is essentially a guideline imposed by a lender that is over and above the loan guidelines themselves.  For example, FHA does not have a minimum credit score requirement per se.  However, I'm not aware of any lenders that do not have some kind of minimum credit score for FHA buyers.  Why do lenders do this?  Because even though an agency such as FHA or Fannie Mae may guarantee a loan, that doesn't mean the lender will not incur a loss if the buyer fails to make their payments.  Therefore, lenders will often analyze the loans they've originated in the past and impose certain requirements that may be over and above the requirements set by the federal agency that insures or guarantees the loans. 

WHAT'S DIFFERENT NOW?

Most lenders have a minimum credit score requirement of 600-620 for FHA loans.  Also, some lenders may either require a second-level signature from upper management on loans that are deemed to carry a higher risk of default, such as for buyers with high debt ratios, low reserves, a spotty employment or income history or buyers that are purchasing a home that's in an area where real estate values have declined significantly.   

OTHER CHANGES:

HIGHER INTEREST RATES FOR BUYERS WITH LOWER CREDIT SCORES AND LESS MONEY DOWN

Fannie Mae began this trend a couple of years ago by instituting "loan level price adjustments" for buyers with less than 740 credit scores and who were putting down less than 40% down (yes, 40%).  Although the adjustments to the rate are very minor at this level, buyers with less than a 680 credit score and less than 20% down may see a significant adjustment to either their rate or to their closing costs.  And since many buyers assume the rate they see advertised is the rate everyone gets, they may budget the cost for their new home based on a rate that is not obtainable based on their situation.  Furthermore, many companies are now imposing rate adjustments to buyers seeking government loans (FHA, VA and USDA). 

MORTGAGE COMPANIES THAT ADVERTISE RATES ON THE INTERNET, TV AND RADIO DO NOT TAKE THESE PRICING ADJUSTMENTS INTO ACCOUNT.  Most advertisements disclose somewhere in their fine print that the rates they advertise assume a credit score of 740 and a 20% down payment.  So don't assume the rate you see is the rate you're going to get until a loan officer has a chance to fully qualify you by obtaining a full credit report and also an analysis of your current situation and income. 

TOUGHER APPRAISAL REQUIREMENTS

Lenders require an appraisal to be conducted on virtually all home purchase transactions to ensure that the price a homebuyer is paying for a home can be justified with recent sales data.  This protects lenders collateral position in case of foreclosure.  In past years, loan officers would simply call their favorite appraiser and request an appraisal. 

Because of perceived conflicts of interest with this process, a new process was created called the Home Valuation Code of Contact, which restricts loan officers and production staff from communicating directly with an appraiser.  The result has led to longer waiting periods to obtain appraisals and sometimes inaccurate appraisals since the management companies often select appraisers that are unfamiliar with an area.  Since the appraisals are now ordered through appraisal management companies, this extra step means extra time (and money in many cases) for home buyers. 

LONGER WAITING PERIODS

The Federal Reserve recently amended the Truth In Lending laws.  Buyers now must wait at least seven days to close after the full terms of their proposed loan have been delivered and disclosed to them.  Furthermore, if the terms of the loan change (which is sometimes not the fault of the lender and may be the result of a change outside of everyone's control), the buyer must wait another three days to close. 

While this may seem like nothing to worry about, keep in mind that the sales contract in Texas calls for a certain specific closing date.  If the buyer fails to close by this date, even as the result of a federally mandated waiting period, the seller has the option of terminating the contract at their sole discretion in the State of Texas.  These waiting periods can often become an issue and put buyers at risk of potentially losing the contract on their home if they wait too long to select a lender.  The days of five day closings are a thing of the past, and the process of the new appraisal requirements can also cause additional delays as well.   The bottom line is that homebuyers need to shop for their loan well in advance of shopping for a home to avoid any potential delays. 

So in conclusion, the changes that have taken place in mortgage guidelines over the last few years have been a lot more than just higher credit score requirements.  In fact, the minimum credit score of 620 that most lenders require to obtain an FHA loan is not much higher than it was a few years ago.  The most significant changes have occured in the more detailed guidelines that most buyers may not even realize exist.  And while it's certainly safe to say that many changes have taken place, it's certainly not impossible to obtain a loan if these situations can be overcome.

But waiting until the last minute to consult with a lender is a mistake that will cost many homebuyers the opportunity to qualify for a home loan.  If you are considering purchasing a home, please contact me today so I can evaluate your situation and put you in touch with a lender that can consult with you at no charge to evaluate your options.