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How Low Can You Go? The Lowest Down Payment Required for a Conventional Loan

By Wendell Cox, Creative Credit Solutions, Member of CCAR’s REALTOR®/Lender Committee

What is the lowest percentage of down payment possible on a conventional loan?

If you responded “20%” – you are with the majority. You are also incorrect.

The lowest down payment on a conventional loan is 3% with Fannie Mae’s HomeReady Conventional Purchase loan product. The HomeReady loan not only requires a lower down payment than FHA’s 3.5%, it also has lower mortgage insurance rates than the traditional 5% to 15% down payment loan options.

HomeReady has reduced the income limits for Collin County and the overall DFW Metroplex from the previous 100% of the Average Median Income to 80%, despite increasing income limits in areas across the country.

This reduction took place on June 5, 2019 when Fannie Mae adjusted its DU (Desktop Underwriter) automated underwriting system to reflect the lower income limit* of $64,240–80% of the Average Median Income of $80,300.

Previously, the income limit* had been around $77,420–100% of the Average Median Income at the time for the Metroplex and Collin County. So, while the AMI went up over all at 100%, Fannie Mae is now choosing to use a lower percentage of the AMI.

“To better align with our housing goals, we are changing the income limit requirements for all HomeReady loans to not exceed 80% AMI for the property’s location (This includes properties in low-income census tracts.)” – Fannie Mae June 2019

A more vibrant economy has pushed the AMI numbers up, which in turn has caused Fannie Mae to segment the HomeReady loan product for “very low-, low-, and moderate-income creditworthy borrowers and to help us fulfill our affordable housing mission and regulatory housing goals.”

Fannie Mae provides a very user-friendly tool to find the HomeReady Income limits per address at: https://homeready-eligibility.fanniemae.com/homeready

As previously mentioned, there is a census tract used to determine eligibility as well. You can find areas that have the 80% AMI limit, as well as areas that do not have income limits at:  www.fanniemae.com/content/eligibility_information/homeready-income-eligibility-lookup.xlsx

We highlight Fannie Mae because it is the most widely used investor for mortgages. However, Freddie Mac is also following this same new calculation for AMI income limits.

For more information on low down payment products and products available to help your low to moderate income buyers, please contact CCAR’s REALTOR®/Lender Committee at [email protected].

*These income limits apply for total household income.

On August 8, Your Fellow VIP CCAR Members Will be Locked Up at Cell Block: CCAR

We all know Texas REALTORS® will do crazy things to support TREPAC…

Exhibit A

…and CCAR members are no different.

On August 8, your fellow VIP CCAR members are being Locked Up at Cell Block: CCAR, and can’t leave until you help them post their bail via a TREPAC investment.

Your investment can be made now and up-to the time of the event online at www.ccar.net/bust or over the phone. Investments can also be made in person at the event on August 8 at CCAR’s headquarters in Plano located at 6821 Coit Road.

Once your investment is made, enjoy a BBQ lunch at the event on us. Also, consider an additional investment by purchasing one of the exciting auction items that will be up for grabs that day.

Are You a Revenue and Expense Type Person?

If so, the CCAR Budget and Finance Committee needs you! The mission of the Budget and Finance Committee is to oversee the financial functions of the Association and recommend to the Board of Directors actions to ensure the financial well being of the Association.

Currently, the Budget and Finance Committee has a vacancy, as member, Ron Leach, has moved into the Committee’s Chairperson position. Therefore, the available term is Sept. 1, 2019 through Dec. 31, 2020. Remaining meetings for 2019 are: October 17, November 21, and December 5. Serving on the Budget and Finance Committee is a requirement to apply for CCAR’s Secretary/Treasurer position.

If you are interested in filling the vacant position on CCAR’s Budget and Finance Committee, please send an email to Deb Garen at [email protected]  no later than Monday, August 12. Your email should include a statement regarding why you would like to serve, as well as information regarding your financial skill set.

June Bucks the Real Estate Market Trends of 2019

The Collin County Association of Realtors (CCAR) reports that June brought many of 2019’s upward trends to a halt, while still delivering the highest median sales price ever reported by the CCAR Pulse.

Throughout 2019, sellers have listed their homes at a growing rate, increasing 43% from January 2019 (5,194) to May 2019 (7,440). June 2019 stopped this trend with 6.3% fewer new listings than May 2019 and 7.1% fewer listings than June 2018.

June was also the first month since January 2019 to have fewer listings under contract (-0.8%) than the year prior, while simultaneously showing a sharp decline of closed home sales than the month prior (4,649 vs. 5,365). Despite June’s dramatic departure from growth, the projected closed sales in June showed a slight increase from June 2018 (0.7%).

With fewer listings under contract in June 2019, inventory increased 8.9% from the year prior, creating 3.6 months of inventory. A market with 6 months of inventory is considered a balanced market, therefore Collin County remains a seller’s market.

Nevertheless, June did allow some trends to remain in tack. The number of days on market continued to decrease- homes remained on the market for 47 days in June 2019; the fewest amount of days on market for the CCAR Pulse area since October 2018 despite a 30.6% increase from June 2018.

Sellers who successfully snagged a buyer in June received 96.6% of their original listing price and, thanks to a 2.3% increase in median sales price from June 2018, received the highest median sales price ever reported by the CCAR Pulse ($332,500). This increase contributed to lower affordability for buyers, indicated by a Housing Affordability Index of 101.

David Alan Cox, CCAR 2019 President, was not surprised by June’s market activity. He explained, “Many home sellers and buyers want to accommodate school schedules; completing transactions in the late spring to early summer to allow children to be settled prior to the start of school. June served as a month of market correction.”

While many homebuyers spent June barbequing with their new neighbors, many are curious as to how many people were motivated to move in July.

It’s Time to Own Your Hustle

Do you have a retirement plan? Can you imagine living beyond closing-to-closing? Are you ready to transition your business from surviving to thriving?

A panel of experts will be ready to help provide you tools to do just that on Thursday, August 1; 1-5 p.m. at the CCAR Headquarters in Plano.

Pre-registration is required, so reserve your spot now at www.ccar.net/event/own-your-hustle and prepare to own your hustle!

Learn from Expert Panelists: 
How to Transition Your Business from Surviving to Thriving 
The Basics of Accounting, Record-Keeping & Write-Offs
Setting Up Systems for Efficient Day-to-Day Operation
Financial Goal-Setting & Effectively Working the Long-Term Plan
Building Internal and External Teams as you Network & Negotiate
Types of Business Structures: LLC, Sole Proprietorship, & Corporation
and more…

Apply Now: TREPAC Trustee Applications Accepted through July 31

Texas REALTORS® is looking for a TREPAC Trustee to serve our region beginning January 1, 2020. If you would like to be a nominated candidate to serve as TREPAC Trustee and go through the interview appointment process, please review the following criteria, as well as the So you are considering becoming a TREPAC Trustee…now what?” document:

1.    To be eligible to be an Elected Trustee, a person must be a REALTOR® member of the Texas REALTORS® and be nominated by the Nominating Committee.

2.    To be eligible to be nominated by the Nominating Committee to become an Elected Trustee, a person must: A.) have contributed at least $110 a year to TREPAC in 2 of the 3 years prior to the time of the nomination, including the year of nomination; B.) have a history of political involvement and a commitment to working within TREPAC in a non-partisan manner; C.) have demonstrated the ability and importance of TREPAC fundraising and served at least one year on a local association’s TREPAC or Government Affairs committee; and D.) be endorsed by: A local association of REALTORS® in the Region in which the nominee resides or maintains the nominee’s principal place of business; or a voting member of the Board of Trustees.

3.    Meet the “Mandatory Requirements and Duties” of a Trustee.

If you are interested in serving as a TREPAC Trustee, please review all of the above information closely, and complete your “Nominating Committee Profile” form prior to July 31, 2019. All forms should be submitted via email by July 31 to Deb Garen at [email protected].

Begin your Certified International Property Specialist Certification Process at CCAR

Recently, Texas REALTORS® analyzed data from April 2017 to March 2018 and published their findings in the “Texas International Homebuyers Report” for 2018. The report shows that international homebuyers added a whopping 10.89 billion dollars to the Texas economy.

The Dallas/Fort Worth metropolitan statistical area was eighth most popular among homebuyers nationwide. No doubt diversifying your everyday clientele.

In response to the growing diversity in our area, CCAR is excited to offer our members a chance to complete two of the required Certified International Property Specialist (CIPS) certification courses.

Occurring only once a year at CCAR, the core CIPS required courses will take place July 22 and July 23 at our Plano office. Members will also have a chance to complete “At Home with Diversity,” one of the required CIPS electives on August 9 at CCAR’s Plano office.

Registration is limited and must be completed individually for each course.

CIPS Instructor, Candy Cooke, believes “Every Texas REALTOR® should be taking these courses. It will help each agent to be successful. The information given in these classes is fascinating. We have so many people moving in that we help to find homes and we do not understand how each culture differs. CIPS gives you the info to be able to work with anyone.  It also makes sure that you reduce your risk.”

Cooke notes that the knowledge learned at CIPS courses is not only fascinating, but also a key factor to an agent’s ongoing success, “…because of our state’s location on the border as well as foreign companies coming in.”

Jamuna Thill, Chairperson of CCAR’s Global Diversity Committee, echoes the powerful pull Texas has for international buyers.

International homebuyers relocating to Texas is not a fad, and will continue as an ongoing trend. International homebuyers will continue to be attracted to Texas due to our location, climate, education, affordability, jobs, infrastructure and economy,” Thill explains. Noting that when agents take time to “…understand what an international homebuyer’s criteria is and why…[they] prevent headaches for everyone.”

Thill acknowledges, “Real estate agents may experience international buyers that request reduced commissions, seem disloyal, or present low-ball offers that make us cringe. It is important to remember international buyers often come from parts of the world where negotiating and stretching their dollar is a way of life. While their requests may seem strange or illogical, our role is to help the consumer find what they want and protect them by using the right forms and treat them with the same respect as you would any other client.”

Don’t miss your only chance this year to begin your CIPS certification process at CCAR, register today!

Summer Dreams of the Perfect Home

This article was originally published May 2019 in North DFW Real Producers Magazine

North DFW is growing at a rapid pace, giving buyers the opportunity to break ground on their very own dream home. What will be on the top of their wish list this summer? We spoke with industry leaders in North DFW to hear what is in high demand and what has lost its luster.

1. Buyers are bored with white on white on grey

This summer buyers are seeking to personalize their space with pops of color on back splashes, painted personal rooms, and islands. Trending colors will range from “ice cream cone” shades such as blush pink or mint green to moody deep jewel colors like emerald green and sapphire blue.

2. Personal preference and self-expression has spread to the exterior

Hillwood Communities recently conducted an extensive survey with over 800 participants, yielding a surprising result: Buyers’ ideal exterior is highly diversified. 36% of the participants desire “English Romantic” exteriors (the traditional brick/stone exteriors commonly found in North DFW), 30% sought Craftsman exteriors, 25-30% wanted a Mediterranean exterior, 22% a home reminiscent of the French countryside, while 21% wanted their dream house to be a “Modern Farmhouse,” and 16% wanted a transitional exterior. Furthermore, buyers are willing to pay for their ideal exterior, with 71% of survey participants willing to pay 5% premium for upgraded exterior architecture.

In response to the survey, Hillwood Communities launched a new community, Pecan Square, where buyers will have various exterior styles to choose from when building their dream home.

Meanwhile, at the Light Farms development in Prosper, K. Hovnanian homebuilders have seen an overwhelming demand for neutral brick tones and messy mortar. A happy blend of the long lasting, traditional brick exterior of North DFW with farmhouse flair. A trend that is sure to surge in 2019.

3. Out with formal in with flex

Unless a multi-generational homebuyer, buyers are not interested in formal dining rooms or sitting rooms. Instead, they are seeking flex or auxiliary spaces that they can use for their varying needs. A family with young children may use the space as a playroom, a professional working remotely can enjoy the space as a home office, or the space can become a home gym for the fitness conscious owners.

4. Mudrooms are required

A space for hats, jackets, bags and messy shoes when entering the home has remained in demand for so many years and proven its functionality that mudrooms will be standard in new builds this summer.

5. To tub or not to tub, that is the question; and the answer is up to the buyer

Some buyers are opting to go without a tub entirely in favor of walk-in showers in secondary bathrooms and a large spa shower in the master bath. Still other buyers desire a large soaking tub in the master and a functional shower/tub combo in the secondary bathrooms to accommodate bathing small children.

6. A great room with vaulted ceilings is only growing in popularity and shows no signs of slowing

Buyers continue to seek open layouts with a kitchen that opens to a larger space for dining and lounging, highlighted with high, preferably vaulted, ceilings.

7. Smart use of space is expected in 2019

Due to land shortage, financial limitations, and resource conscious buyers, builders have demanded ingenuity from their architects. Buyers are delighted when they find a one story that has four bedrooms, two bathrooms, and a flex space under 2,300 square feet.

The trends of 2019 make this summer an exciting time to build a new home. A time when personal preference is king; from exterior design, use of color, to the formation of a bathroom. The biggest question from builders to buyers now is, “What do YOU want?”

Is Collin County the Tortoise or the Hare?

PLANO, Texas — The Collin County Association of Realtors (CCAR) reports that slow and steady really does win the race as slow growth rewarded sellers with record-breaking profits and buyers with increased ability to purchase their home along with strikingly high inventory levels in May 2019.

Seller’s increased profits were due to the median sales price hitting $326,500 in May 2019. A mere 2% increase from May 2018, yet resulting in the highest median sales price ever recorded for the  CCAR Pulse area. The same percentage of original listing price was received in May 2019 as the month prior (96.5%), signifying that the median sales price increase was a result of higher original listing prices in May 2019.

While an increase in sales price was good news for sellers, it was not necessarily bad news for buyers. In May 2019, the Housing Affordability Index increased 2%, matching the 2% increase of median sales price; indicating that the median household income is 103% of what is necessary to qualify for a median-priced home under prevailing interest rates.

Additionally, the CCAR Pulse area had a substantial 16.3% increase in inventory in May 2019 than May 2018 (13,983 vs. 12,020), providing buyers with ample homes to purchase. The increased inventory resulted in 3.5 months of inventory in May 2019, a 20.7% increase from May 2018.

However, high inventory does not mean a  slowing of sales. In May 2019, buyers continued to snatch up new listings at an increased rate, resulting in 15.5% more projected closed sales in May 2019 compared to the year prior (5,935 vs. 5,139).

David Alan Cox, CCAR President, reports that, “Collin County’s housing market is healthy and growing at a sustainable rate. It feels different from two years ago with bidding wars and messy multiple offer situations, but the slow and steady growth of 2019 has continued to provide seller’s with increased profits, while allowing buyers to breathe a bit easier when considering a home.”

Indeed, the tortoise pace of 2019 has removed the frenzy, provided seller’s with confidence their investment is appreciating, and allowed buyers time to consider their purchase. Not a bad way to win a race.

May 2019 Pulse Statistics Update Directed and Produced by Garrett Holton, CCAR Videographer/ Digital Media Editor