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Happy New Year and Happy New Decade!

December 31st, 2009

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Happy new year to all! I want to close out the year 2009 with a few short thoughts and favorite quotes from people far smarter than me:

1. Never act on emotion, unless love is involved.

2. Get information from more than one source, and consider the source.

3. Buy a house as if you will live there a long time, you just may.

4. Big government has never solved any problem, big government only creates problems. Before the Civil War government in America was the highly decentralized, limited government established by the founding fathers. The Civil War (and further the New Deal) created the highly centralized state that America labors under today. The purpose of government was transformed from the defense of the individual, to the quest for an empire. Read the rest of this entry »

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Should I Buy Now And Avoid Higher Interest Rates?

December 26th, 2009

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Should I Buy Now And Avoid Higher Interest Rates?

This is a common question I get. Potential home buyers will worry that rates are going to spike, after all, "how long can they stay this low," goes the logic. So some buyers assume they should buy now, at any price, and avoid a future rate increase. I am not sure how long rates can stay low, they have been low for almost two decades in Japan! But, I thought for fun, we'd look at some different numbers. Keep in mind the below are based off of broad assumptions of my own:

Buying a three bedroom house today, in the Washington DC Metro area in a good neighborhood, let's assume costs $700,000. Further, let's say the buyer is ecstatic to get a rate of 4.875% on a 30 Year Fixed Rate mortgage, and that they have a 20% down payment. Should the buyer be ecstatic? Read the rest of this entry »

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FHA To Make Things A Bit Harder

December 14th, 2009

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The FHA is reeling from rising defaults in its mortgage business. By law the agency must set aside 2% cash to deal with unexpected losses. As of September 30, those reserves had dropped from almost $13 billion to just over $3.6 billion. This total represents only one-half of one percent of all outstanding single-family-home loans insured by the FHA, the first time since 1994 that it has been this low. Read the rest of this entry »

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Mortgage Debt Ratios

December 11th, 2009

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Debt ratios are what banks use to qualify a mortgage borrower. Your debt ratio is what percentage of your gross income a bank will allow you to spend on a new mortgage and your existing debts.

The debts that a bank will count against you are car loans, student loans, credit card debt, the new mortgage you are qualifying for, and any other mortgage debt you may have. They do not count debts like auto insurance, utilities, cell phone bills, etc.

Fannie Mae is currently dropping there maximum debt ratio Read the rest of this entry »

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Will Interest Rates Stay Low?

December 7th, 2009

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Just when everyone thought rates were on a straight trend line pointing down! A few days ago, on Friday, December 4, 2009, there was a fairly bullish jobs report. Bond yields jumped up, hence, interest rates rose a bit. For a few days, I was locking-in clients interest rates at 4.75% with zero points on a 30 year fixed-rate conforming loan (which is a loan that is equal to $417,000 or less). Read the rest of this entry »

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Streetcars In Washington, DC Again

December 4th, 2009

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Streetcars are returning to Washington, DC, almost 50 years after the District shut down the old system in 1962 when DC Transit was ordered by Congress to switch to buses. Congress had forbidden overhead wires in the city as early as the 1880’s to preserve views of the White House and the Capitol.

At one time, there were almost 200 miles of tracks running through Washington DC and its suburbs. Read the rest of this entry »

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Interest Rates Are Down!

December 2nd, 2009

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Interest rates are down, do you need to refinance? Are you looking to buy a new home?

I have noticed in the past that when rates go down, they do not seem to stay down for very long. It seems they stay down for days, maybe weeks. Right now you can get a 30 year fixed-rate mortgage for somewhere around 4.75%, and you can get a 15 year fixed-rate mortgage for somewhere around 4.25%. The specifics will depend on the loan size, your credit score, the property type, property location, etc. Read the rest of this entry »

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If I Were Rich…

December 1st, 2009

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If you were rich, would you buy a huge, expensive house? Would you spend $39 million on a house?

I did a search for the most expensive home on the market in Washington DC, and came up with 1623 28TH ST NW, WASHINGTON, DC 20007. The asking price is $39,500,000. I have a lot of questions…

How do you come up with that asking price? Are there really comparable sales that can support a price of $39,500,000? Or are you pricing it to sell to a developer, and estimating the value as a developer would? Read the rest of this entry »

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