San Antonio Real Estate

Some home buyers will be receiving a bit of a tax break for the 2007 tax year thanks to new legislation that will make mortgage insurance (MI or PMI for private mortgage insurance) tax deductible.

PMI, is a type of insurance that insures the lender in case the buyer defaults on the loan. The lender usually requires PMI when the buyer has a down payment less than 20% of the asking price of the home.

Many homeowners will be eligible to deduct 100% of the PMI they paid in 2007 on thier federal tax returns.  This law applies to all new mortgage transactions between January 1, 2007 and December 31, 2007.  There are some other deductibility stupliations including:

• The tax deduction only applies to mortgages closed in 2007
• There are income limits.  A 100% deduction is applicable for gross incomes of $100,000 or less. 
• No tax deductions are available for gross incomes over $110,000.

Note that this law has only been approved for tax year 2007 and there is no guarantee that it will be renewed, but at least it will be a nice benefit to new homeowners for this year.

Christina Whipple
http://www.christinawhipple.com/

Texas Commissioner of Insurance, Mike Geeslin, ruled that all title insurance premium rates be lowered by 3.2 percent, across the board. Starting Feb. 1, 2007, all Texas title companies must follow the new, lower rates.

The decreasing premium rates are nothing new to Texas title companies. In 2004, the state ruled that premiums should drop by 6.5 percent. And, over the last eight years the rates have been cut by 17 percent, according to numbers from the Texas Department of Insurance.

Jerry Hagins, a spokesman with the Texas Department of Insurance, said the premiums are decreasing simply because of profits. “They’ve been paying out less than what they’re taking in,” Hagins said of the title companies.  The department staff analyzes title companies’ profit targets, expenses and losses when gathering data for each biennial rate hearing, he added.

As an example of cost savings, the title insurance for a $150,000 home under the current rates  would be $1,227 and will be $1,110 starting February 1, 2007 under the new rates.

Christina Whipple
http://www.ChristinaWhipple.com
Christina@ChrisitnaWhipple.com

When people find issues with their credit and try to act to make repairs, they can often make the situation worse by not understanding what variables go into their credit score. 

Although the exact formulas for calculating credit scores are not disclosed to the public, Fair Isaac has disclosed the following components with the approximate weighted contribution of each:

1. 35%,- payment history
2. 30% - the amount of debt, expressed as the ratio of current revolving debt (credit card balances) to total available revolving credit (credit limits)
3. 15% - length of credit history
4. 10% - types of credit used (installment, revolving, consumer finance)
5. 10% - recent credit inquiries and/or amount of credit obtained recently

The following are some of the common mistakes that people make when attempting to repair their credit.

When it comes to applying for home loans, buyers now have options other than the traditional 15 and 30 year home mortgages with 40, and in some cases, 50 year home loans being offered.

The 30-year fixed-rate mortgage may still be the most common home loan in the country, but 40 year loans are picking up speed, accounting for 5 percent of all new mortgages in the United States, and 50 year loans are not far behind. But are they the most economical options for homeowners? While extending the period of the loan would seem to benefit the borrower, Dr. Harold Hunt of the Real Estate Center at Texas A&M University said that is not necessarily the case.

“The 40-year and 50-year loans have provided minimal affordability relief to homeowners in markets outside Texas,” Hunt said. “A significant number of these borrowers have originated interest-only loans or ‘exotic’ loans that can actually increase loan balances. These loans offer little advantage to Texas borrowers and should be viewed with skepticism by anyone intending to keep a mortgage ten years or less.”

Known as “hybrid ARM” loans, 40 and 50 year loans begin as fixed rate mortgages but are converted to an adjustable rate mortgage (ARM) after a specified term. For most 50 year loans, this happens five to ten years after the loan is made. In theory, this increase is intended to compensate for the lender’s money being tied up for a longer time, assuming the loan matures. In reality, the mortgage is usually refinanced or paid off when the home is sold, well before loan maturity.

Although the amount of interest paid over ten years or less is not appreciably different, the difference can add up with 40 and 50 year loans, making them substantially less effective than a 30 year loan at reducing an outstanding balance. On top of that, Hunt said they do little to lower monthly mortgage payments. “For a $100,000 loan, the largest reduction in monthly payments would be about $33,” he said.

Hunt said 40 year and 50 year loans make even less sense if a borrower intends to retain the mortgage more than ten years. A 30 year loan’s interest rate is locked in over the whole 30 year term while the 40 and 50 year loans must eventually convert to an ARM. “This exposes the borrower to the risk of future payment increases should interest rates rise above the level they were when the loan was originated,” Hunt said. “Considering today’s historically low interest rates, that risk is not insignificant.”


Source: Texas Real Estate Center - The Real Estate Center has been providing solutions through research for 35 years. Funded primarily by Texas real estate licensee fees, the Center was created by the state legislature to meet the needs of many audiences, including the real estate industry, instructors, researchers and the general public.

Christina Whipple
www.ChristinaWhipple.com

The 2006 real estate market report from the Texas Real Estate Center is now available on my website. The report covers census data, employment and unemployment, major industries, business climate, education, transportation and infrastructure issues, growth patterns and much more. Click on the link below to download this report.

2006 Real Estate Market Report

Some highlights from this report for the San Antonio area are as follows...

Average Home Prices in San AntonioThe median price for a San Antonio residential home in 2005 was $131,100. The required income to qualify for this home is $30,899 while the median family income in San Antonio during 2005 was $50,500. This means that a residential home is still attainable for the average San Antonio family.

Christina Whipple
www.ChristinaWhipple.com