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Tuesday, October 30, 2007

Travel & Leisure Magazine Ranks Austin Among Top US Cities

Readers of Travel & Leisure Magazine have ranked Austin one of the top 25 travel destinations in the United States. What makes Austin a great place to visit, also makes it a great place to live!

Austin’s best overall characteristic was voted Live Music. We came in 1st place for the Singles Scene, and 2nd for Barbeque. (My favorite place for barbeque is The Salt Lick, just outside of Austin in Driftwood.)

We also ranked high in the following categories: After Dark, Safety, Public Parks/Spaces, Food/Dining, Attractive/Athletic People, Fun, and Wild Weekend. To see the full list of rankings, click here: http://www.travelandleisure.com/afc/2007/city/austin.

Thursday, October 25, 2007

How to Choose an Inspector

When choosing an inspector, you want to find someone who is professional, knowledgeable, and pleasant to work with. So how do you figure out who fits that description? Ask people you know for recommendations. Your Realtor will likely have a few names and possibly even you know someone who has bought a house recently. Then call and talk to a few different inspectors on the phone. The phone call is not just for quantitative information like cost, time, etc. It is also to see whether they are willing to take the time to talk to you and how they respond to your questions.

Ask if you can attend the inspection. As I said in my previous blog: I highly recommend that you do. It will give you the opportunity to ask questions and learn about your potential new home. Most inspectors are happy to explain what they are doing and why it is important. They will also answer any questions you have that come up at a later time. If the inspector doesn’t want you to attend, or is impatient at answering your questions, find someone else.

When you call the inspector, he will also have some questions for you, so have this information handy:

  • address of the house to be inspected
  • square footage of the house (could affect the cost)
  • year home was built
  • type of foundation (could affect the cost)
  • sellers disclosure (some want to see it, some don’t)
  • any concerns you may have

The inspector may not inspect atypical systems or items, such as swimming pools, wells, or septic systems, and some inspectors will not conduct environmental tests or wood-destroying insect inspections. Be sure to ask when you are making the appointment and whether it will incur an extra charge. If they do not, you will need to make those appointment separately.

Here is a list of questions for quick reference:
• How long have you been licensed in Texas?
• Are you a full-time home inspector?

• How much do you charge?
• What could cause an additional charge?
• How much would you charge if I ask for a reinspection after repairs are completed?

• What will the inspection include?
• Do you inspect gas lines, swimming pools, spas, septic systems, and wells? (You can identify other atypical systems or items.) Do you charge extra for these?
• How long will the inspection typically take? (Anything less than two hours is not long enough for a thorough inspection.)

• Will you supply a written report? (The inspector should.)
• When can I expect to receive the written report?
• Can I attend the inspection?
• Can I call you with questions that come up later?

Monday, October 15, 2007

Inspections are Important!

A house is an expensive and important purchase, and an inspection allows you to know what the condition of the house is. To quote an old proverb, “Forewarned is Forearmed.” If you know about any potential problems earlier, then you are better prepared to handle them when they arise later. A professional home inspection can also be a helpful tool if you choose to continue negotiating on the property with the seller.

In Austin, a home that is 1500-2000 sq.ft. can cost around $400-$500 due at time of inspection. A thorough inspection will take a minimum of 2-3 hours. Afterward, the inspector will provide you with a written report in a timely manner detailing what he found and any recommendations he may have.

If the house is occupied, be sure to notify the sellers agent of the date and time you have made for the inspection, so that the owners can provide access to the property. If the house is unoccupied, the inspector will need the utilities on to conduct a full inspection.

I recommend that you attend the inspection. It will give you the opportunity to ask questions and learn about your potential new home. Be sure to check first, but most inspectors will welcome questions and be happy to explain what they are doing and why it is important. They will also answer any questions you have that come up at a later time.

You can find a blank copy of the standard inspection report form at www.trec.state.tx.us to give you an idea of what may or may not be covered in the inspection. It should generally include the electrical, heating and central air-conditioning systems; interior plumbing, visible insulation, roof, walls, ceilings, floors, windows, doors, foundation, basement, and the visible structure of the house. If the inspector sees something that concerns him but is but out of the scope of his expertise, he may recommend that you consult with another professional. For example, if there is a possible foundation issue, he may recommend that you have a structural engineer or foundation company take a closer look. Unless you have decided that there are too many other issues and you do not want the house, you should schedule the next appointment as soon as possible. If you are undecided, you should still schedule the next appointment as soon as possible. After all, the purpose of the inspection is to make sure that you have all the information so you can make an informed decision.

Next Blog: How to Choose an Inspector

Thursday, October 4, 2007

Mortgage Market Woes

Here is the very simplified formula for what happened:

Low interest rates* + a lot of available money + housing boom
= Harder to see risks
= Investors willing to buy collateralized debt for more than the lenders paid
= Lenders lowered their standards for making loans and a lot of people (sub-prime/alt-a borrowers**) get loans who cannot repay them. If they get to a point when they can no longer make the monthly payments, all the borrowers had to do was sell the house for more than they bought it. The way the market was at that time, that strategy worked!

Then home values started to decrease…
> Risks became more apparent
> Investors will not buy or will only pay less to the lenders for the collateralized debt
= Lenders stop making risky loans
= For some lenders, it is too late. They already made risky loans that they cannot sell for more money. They can’t cover their losses and go out of business

*an interesting side-note…. rates were dropped in 2000/2001 to soften the blow of the collapse of the dot-com bubble

Here are a few more things to know that will help you understand. Although some banks and mortgage companies do keep the loans that they make, many sell their loans to investors on the secondary mortgage market. The lenders will group many types of loans (prime, alt-a and subprime) together and sell as it as collateralized debt. This is supposed to reduce the risk of the individual loans. Unfortunately, it also explains how the collapse of the sub-prime market can affect the prime and alt-a markets. What affects one market gets all of them.

Prime borrowers get the best interest rates on their loans because they have a good credit history and can prove that their income will cover the monthly payments. If they add to that the ability to make a down payment of 20% the purchase price of the property, then they are considered the least risky of borrowers.

Alt-A borrowers have a good credit history but either have little documentation or no documentation to prove their income. For example, people who earn tips or commissions could be in this category.

Sub-prime borrowers are the most risky and as a result, get the highest interest rates. They generally have problems with their credit history and cannot prove their ability to make the monthly payments on the loan.