TOP STORY: Rates creep up
A recent survey and a rate increase could mean more competition for homes
Recent indication is that first time home buyers are getting tired of sitting on the sidelines. According to a recent online poll taken by the National Apartment Association, 17 percent of renters plan to make the jump to home ownership in the next year; 41 percent of the 2,041 respondents planned to be home owners within two years. Only 31 percent planned to still be paying rent five years from now.
Another factor that could very soon contribute to an increase in home buying could be rising mortgage costs. Fixed-rate mortgage rates rose to 6.32 percent, the highest it has been since October. After months of aggressively dropping interest rates, many lenders are worried that the Fed will be forced to raise rates back up. As interest rates rise, so do mortgage rates. According to a press release on freddiemac.com, Frank Nothaft, Freddie Mac vice president and chief economist said that, "Mortgage rates jumped this week after a number of Federal Reserve officials, most notably Chairman [Ben] Bernanke and Vice Chair [Donald] Kohn, expressed concern over a threat of inflation." We may very well be seeing the beginning of the end of the super-low mortgage and potential buyers may realize that with rising rates, now may be the time to jump in. Nothaft added, "Moreover, pending home sales for April unexpectedly rose by 6.3% and mortgage applications for home purchases ... were also up last week."
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Agents: Your First Home: The Proven Path to Home Ownership, the first book of the Keller Williams Realty Guide Series is the perfect lead generation tool for the first time home buyer market. Putting you at the center of the real estate transaction, it is the tool that you need to move hesitant buyers into their first homes! Click here to order copies of the book! |
"I'm donating to KW Cares - are you?"
Donate when you buy your tickets to the America concert
Join your Keller Williams family at the America concert on Sunday, August 24, kicking off the Mega Camp and Masterminds week. This concert is brought to you by Operation Heart to Heart 2 and benefits KW Cares and One World.
"This is such a great opportunity to catch up with what's going on with my friends and colleagues in other areas of the country while supporting two worthy causes. We all need to keep helping KW Cares! I wouldn't miss this annual event for anything!" Carol Peyton, KWU Master Faculty Instructor.
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Click here to buy your ticket to America and to make your donation to
KW Cares and One World.
Financing Solutions with David Reed
Using Rental Income to Help Qualify
There are times when the perfect home unexpectedly comes on the market … at the wrong time. The potential buyers are unprepared for the new listing, and if they don’t act fast their “perfect home” will be snatched up by someone else. However, with some creative financing on their side, they can nab the home of their dreams without the added pressure of another mortgage.
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Visit Reed's Website |
One of the biggest obstacles that buyers can face is having to qualify for a second mortgage while still paying their current mortgage. For example, if potential buyers have a current payment of $2,000 and their new home will require an additional $2,500 payment, then they will likely struggle to afford the new property. Still other buyers find a new property but don’t want to sell their current home. Maybe the market isn’t as good as they’d like and they don’t want to sell now, or perhaps it’s a wealth-building strategy to keep the asset in the family. Whatever their reasons, buyers can offset the second mortgage with a new renter—but only under certain circumstances.
Lenders can only allow rental income to be used to offset the old mortgage—they cannot use the rent from the new tenant as “income” to help qualify for the new (or second) mortgage. It sounds odd, but here’s how it works.
The renter must sign a minimum 12-month lease, provide a copy of a cancelled rent deposit check made out to the client and pay current market rent for the
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area. Current market rent is established independently using a
third-party appraiser to perform a “rent survey.” Ultimately, it is this number – current market rent – that the lender will use as rental income, regardless of what the lease agreement says.
If the rent survey says that market rents are $2,800, then that’s the initial rent number the lender will use to help qualify the buyer for the new home. Next is what’s called the “vacancy factor,” which immediately reduces the market rent to 75 percent of its value. In this example, the $2,800 would be reduced to $2,100 for qualification purposes.
If the old principal, interest, tax and insurance payment (PITI) is $2,000, then the lender subtracts that $2,000 from the reduced market rent of $2,100 and gets $100. Now, the old mortgage has been offset by the adjusted market rent and the buyer can qualify for the new mortgage. It’s important to note that lenders won’t apply the net rental income ($100) to help buyers qualify. Seasoned landlords, or owners of real estate that collect rent from various tenants use a different method to calculate income and it’s taken from their tax returns.
But for the potential buyers who find a property and can’t qualify for two mortgages, this is an excellent method if followed correctly.
High stakes competition
We know you are making the calls. We know you are doing one hour of highly focused lead generation to build your business. So send those success stories our way!
Are you holding a competition within the market center? Are you setting record numbers with the amount of calls being made by agents? What kind of results are you seeing? Let us know what’s working and let’s keep up the momentum with Power Hour!
Team Leaders and Operating Principals:
Submit your Power Hour results by going to www.kw.com, logging into the Intranet, going to My Information, and clicking on the My Contests link.
Mega Metrics:
Prizes for agents who achieve the most listings between May 5 and August 15, 2008. Prizes for team leaders who recruit the most cappers and mega agents between May 5, 2008 and Family Reunion 2009. And more prizes for operating principals who get the most contacts, appointments, and signed mergers and acquisitions between May 5, 2008 and Family Reunion 2009.
| Prize Information | |
| Agents | Click Here |
| Team Leaders and Operating Principals | Click Here |
Get on the phone (and Internet)!
Register today for the latest free MAPS coaching calls
Register today for the latest free MAPS coaching events.
Mon., June 23 2 p.m.- 3 p.m. CST |
Chris Heller |
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Tues., June 24 11 a.m.-12 p.m. CST |
Jack Miller |
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Please note the time change for Monday, June 23 and the date change for Tuesday, June 24; free calls typically take place on Mondays and Wednesdays at 11am CDT |
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Click here to see our entire free call schedule.
Each of these sessions is a $49 value, but MAPS is offering
them to you for free!
Market Center Leadership Corner
Is your ALC setting the standard?
Mega Camp and Masterminds keep your ALC in the know
So much of the success and profitability of your market center is tied to the success and effectiveness of your Agent Leadership Council (ALC).
Sending your ALC to Austin for Mega Camp, August 25-27 and Masterminds, August 26-28 not only encourages their growth, but that of your entire market center.
Make sure that your ALC is on the leading edge of what it takes.
Register today!
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Leverage MREA to recruit your dream team
Designed to help you utilize the best-selling, The Millionaire Real Estate Agent to grow your team, the MREA Recruiting by the Book 33-Touch campaign and corresponding 8x8 campaign are recruiting gold!
Based on the 24 topics from Holly Perry's Recruiting by the Book tour, these MREA Recruiting by the Book campaigns will ensure that you continue to reel in top talent.
Access this great new resource in your Market Center Edition of ProManage under Email - Email Library - KW MC Recruiting: MREA Recruiting by the Book.
Masterminds and Mega Camp signature line
Add Mega Camp and Masterminds to your email signature and ensure that your team takes advantage of the phenomenal education that Keller Williams Realty offers. Education equals knowledge and knowledge equals higher production!
Instructions:
- Click here to access the image
- Click on the link to open a new window, hit CTRL+A to highlight the picture and then CTRL+C to copy it.
- Create a new signature in Outlook and hit CTRL+V to paste the picture into your new signature.
And spread the word!
Comments or questions for THIS WEEK@kw? We want to hear from you!
Contact us at marketing@kw.com.
