real estate talk

Though the media is full of alarming stories, you don't have to offer up yourfirst born to buy a home

The media is full of scary stories about how hard it is to qualify for a mortgage. Just check out a few of these recent alarming headlines:

With mortgage rates near historic lows and home prices down roughly 25 percent (national average) from their peak, now may be a great time to buy a home. But can you qualify?

Certainly, it's more difficult than it was few years ago, but it may not be as hard as the stories claim. You don't have to walk on water. You don't have to offer up your first born. You do have to be prepared.

This is the first in a series of weekly articles that will examine what it takes to qualify for a home loan these days. We will look at the factors that affect your ability to qualify and suggest what you can do to prepare yourself.

We will start by examining credit. What does your credit score mean, and what score do you need to qualify for a loan? We will examine how derogatory information in your credit history—such as late payments, collections and bankruptcies—can affect your score. If your credit score is currently low, we'll outline steps you can take to raise it. And, finally, we'll discuss how you can qualify for a mortgage even if you don't use credit, as well as how you can re-establish credit after a major financial event, such as a bankruptcy.

From there, we'll turn our attention to employment. Conventional wisdom is that you need to work in the same job for two years before you can qualify for a mortgage. That's not necessarily true. We'll discuss how you can qualify if you recently have changed jobs, left the military or graduated from school. We'll also discuss how a period of unemployment affects your ability to qualify.

One of the most important factors affecting your ability to qualify is the affordability of the mortgage payment. We measure this by examining your qualifying income and your other debts. We'll discuss how to calculate your qualifying income, including income from part-time and second jobs, commission and bonus income, and retirement income. We'll also discuss how deferred student loans, cosigned loans and collections can affect your ability to qualify.

Our final factor is liquidity. Do you have enough cash to close the deal? This includes your down payment (if any), closing costs, and pre-paid expenses due at closing (mortgage interest, property taxes, and insurance). We'll review the down payment requirements for different loan programs, and we'll discuss how the size of your down payment affects the need for mortgage insurance. We'll also give you ways to avoid paying closing costs and pre-paid expenses, including asking the seller to pay them for you.

Check back next week when we dive into credit reports. If you have any questions or comments, or if you have suggestions for other topics I should cover, please leave them in the comments section below. And please remember that mortgage programs and guidelines change and vary between lenders, so it's always best to check with a mortgage professional to determine if you qualify.

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Preserving Texas

Protecting Texas for generations: The Texas Land Conservancy and centennialranches

Bluebonnets at Pike Davis Ranch
Terry and the river
Fox at Pike Davis Ranch
Photo by Matt Hicks
Pike Davis himself with friend Hiram Yost.

Cousins Howard Hicks and Bettie Green didn’t want their grandfather’s Hill Country ranch cut into subdivision lots and corner convenience stores.

“I had this real desire for it to continue to be a working ranch as long as possible, because I felt that what’s my granddad would have wanted,” says Green, now a grandparent herself. “We all wanted it to stay pretty much as it is.”

Hicks agrees. “It’s important to keep it where we could graze cattle on the land and make money from it. But our kids and grandkids have been coming here for years and have feelings for it and we also want to practice conservation.”

Their grandfather, Pike Davis, was one of five grandsons of Alfred Davis, who came to Texas in 1854. The earliest record of Davis owning land is in 1871, the cousins say. He accumulated an additional parcel, eventually owning 4,300 acres. Details are a bit sketchy; some records were lost when the Blanco County courthouse burned down, others when a tornado destroyed the family home in the 1920s.

“Ninety-five percent of land in Texas is privately owned, so the best chance at protecting land here is if private landowners lead the cause by electing to protect their own land in partnership with conservation organizations."

Over the years, pieces of the ranch were sold off. Today, it encompasses 1,415 acres of Llano Uplift in the Colorado River watershed, falling in both Blanco and Gillespie Counties. In 2008, Hicks, Green and other members of their extended family approached the Texas Land Conservancy (TLC), says executive director Mark Steinbach. The land conservation non-profit has been around since 1981 and preserved 108 properties totaling 80,000 acres around Texas.

“We completed a project with two adjacent properties in 2007, and the owner was so happy with the result that he recommended us to Howard Hicks,” says Steinbach. Hicks completed an easement on his individual property adjoining the Pike Davis Ranch in 2008. TLC staff spent the next four years meeting with the various owners and bringing everyone to agreement about how they wanted the preserve the ranch.

Together, these four properties protect 2,115 acres of Hill Country landscape, an area larger than Garner State Park and including frontage on the Pedernales River. It includes abundant native plants and natural habitat, water resources, and a lot of history. The latter means the most to Green. “Just to go around and say, my relatives walked here, that’s the most important thing to me.”

For TLC, one of the most important conservation values is the joining of the four properties. “It’s a tenfold outcome versus one piece of property,” Steinbach says. “Stitching together private lands in this way allows us to protect vast landscapes. With the price of land in the Hill Country, it’s nearly impossible to protect such large tracts without working in partnership with landowners.”

Conservation easements are a tool to help families with their long-term planning goals, he explains. Under a voluntary, negotiated agreement with TLC, the owners retain the right to build houses, within reason, and conduct other activities such as agriculture and hunting. “Easements protect the property from land fragmentation, and large-scale or intensive development,” Steinbach explains. “The landowner can pass it down to heirs, or sell it. The easement is perpetual and so runs with title of the land.” Tax benefits are the main takeaway for landowners, he adds. “By donating development rights to us, the owners can take a tax deduction of that value.”

Typically, the taxable value of the property is diminished by anywhere from 30 to 50 percent. “If the land is worth a million dollars, then perhaps $300,000 of that would be donated. With Hill Country land as valuable as it has become, that makes for a good enough incentive.” But even with tax benefits, the easement is not a money making strategy for landowners. Those who enter into an easement tend to have a conservation ethic in the first place.

“This will be the second centennial ranch, meaning one in the same family for more than a century, for us,” Steinbach adds. “It’s pretty significant that a family could hold land together for that amount of time, and now ensure that the next generation can hold the land. It’s a historically significant piece of property.”

The ranch will not be open to the public, which is the case with many conservation easements, but it will contribute to the public good, says TLC Outreach Coordinator Callie Thompson. “Ninety-five percent of land in Texas is privately owned, so the best chance at protecting land here is if private landowners lead the cause by electing to protect their own land in partnership with conservation organizations. Because Pike Davis will never become a shopping mall or parking lot, it will continue to be a public asset through its preservation of scenic views for everyone, protection of water quality, and conservation of native plant and animal species.”

Without the easement, the ranch most likely would be developed at some point. “Areas in Texas that are not under some kind of conservation easement, or that aren’t large properties that someone can afford to keep, are going to be developed,” Howard says.

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