The Dallas-Fort Worth area is experiencing a great housing market in comparison to the rest of the country. In the recent S&P Case-Shiller Index it showed home prices rising by more than 12.2% in May and 12.4% in July, with Dallas prices sitting at 8% in June where it was 7.6% in May, a record level surpassing the region’s pre-financial crisis peak set in June 2007.
In an interview a few months ago with Bryan Sherman, Senior Vice President, Regional Sales Executive at Bank Of America Home Loans he talks about home loan qualifications and the tools that Bank of America has for potential home buyers.
Steve Brown wrote in a Dallas Morning News article about what could possibly be a 4% overvalue of hones. Not really a cause of concern, but how should the average consumer looking to buy assess that kind of information when they are looking for a home?
Sherman: Obviously from the information that you posted about Case/Shiller Index information the home value appreciation shows signs that the housing market is recovery. It's a positive . . .home prices are increasing and it has turned to a seller's market. Be cautious if not for any reason but it's important that the consumer is educated and align themselves with a reputable lender. Go through the prequalification process and get what you can afford.
What is the prequalification process?
Sherman: It's a uniqueness to Bank of America, whereby education is the key to sustainable home ownership for these consumers. There are lots of tools and resources available such as a home loan planner with what the process looks like from prequalification and funding. There are tips on down payment, the different types of loan products, what to bring and the key people involved.
Summer in Texas is when families are buying homes, is their a season that is better than others when purchasing a home in Texas?
Sherman: Seasonality doesn't have an impact on prices. There's a period of seasonality where homebuying is more prevalent. Tied to schools, you some people feel it's better to make a move for schools. There shouldn't be an impact on pricing. The right time to buy is when you are personally and financially able.
If you have bad credit, can you still get a home loan? What can potential homeowners with bad credit do?
Sherman: Depending upon the product there are very specific guidelines, for someone with bad credit or bankruptcy and steps they need to take. One of the values that we can provide is we have a network to connect partners and help them repair their credit to get them to a point where they can get a loan.
How has the overall lending process evolved these past years and what should potential homeowners expect in terms of credit and interest rates?
Sherman: Education is more important and we typically tell people not to time the market and to time when it's right to you. Education is the key. There's these assumptions out there and we encourage people to utilize the tools and resources to educate themselves. Consultative approach in the originators in the market.
What are some different home loan products? How have these home loan products, like the FHA 203(k) renovation loan, helped encourage more buyers to look at homes that may require repairs or updating? And why is this a smart option in markets with reduced inventory of homes and/or rising prices?
Sherman: The FHA 203(k) is not a new product. It's a good product for individuals who require a home upgrade for their primary residennce. 30% of millenials surveyed would purchase this type of home versus a house with minimal repairs. Itcan be used for a house which you love. Not a lot of new products in the last 6 or 7 years. The products good today are pretty standard across the board.
How has the overall lending process evolved these past years and what should potential homeowners expect in terms of credit and interest rates?
Sherman: The stability of interest rates - will rise in the past few months. It's still at historic lows. We are still at an all time low. There's actually a study by Freddie Mac economist with interest rates rising closer to 7% before median household incomes would face affordability issues. Going on about investment speculation, I don't believe speculation drives value it's just supply and demand situations. Ultimately even when interest rates were higher. People still purchased homes - those things don't go away.
For help on planning for your home loan check out Bank of America's Home Loan Planner.
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