The embers glowed softly, and in their dim light,
I gazed round the room and I cherished the sight.
My wife was asleep, her head on my chest,
My daughter beside me, angelic in rest.
Outside the snow fell, a blanket of white,
Transforming the yard to a winter delight.
The sparkling lights in the tree I believe,
Completed the magic that was Christmas Eve.
My eyelids were heavy, my breathing was deep,
Secure and surrounded by love I would sleep.
In perfect contentment, or so it would seem,
So I slumbered, perhaps I started to dream.
The sound wasn't loud, and it wasn't too near,
But I opened my eyes when it tickled my ear..
Perhaps just a cough, I didn't quite know, Then the
sure sound of footsteps outside in the snow.
My soul gave a tremble, I struggled to hear,
And I crept to the door just to see who was near.
Standing out in the cold and the dark of the night,
A lone figure stood, his face weary and tight.
A soldier, I puzzled, some twenty years old,
Perhaps a Marine, huddled here in the cold.
Alone in the dark, he looked up and smiled,
Standing watch over me, and my wife and my child.
"What are you doing?" I asked without fear,
"Come in this moment, it's freezing out here!
Put down your pack, brush the snow from your sleeve,
You should be at home on a cold Christmas Eve!"
For barely a moment I saw his eyes shift,
Away from the cold and the snow blown in drifts..
To the window that danced with a warm fire's light
Then he sighed and he said "Its really all right,
I'm out here by choice. I'm here every night."
"It's my duty to stand at the front of the line,
That separates you from the darkest of times.
No one had to ask or beg or implore me,
I'm proud to stand here like my fathers before me.
My Gramps died at ' Pearl on a day in December,"
Then he sighed, "That's a Christmas 'Gram always remembers."
My dad stood his watch in the jungles of ' Nam ',
And now it is my turn and so, here I am.
I've not seen my own son in more than a while,
But my wife sends me pictures, he's sure got her smile.
Then he bent and he carefully pulled from his bag,
The red, white, and blue... an American flag.
I can live through the cold and the being alone,
Away from my family, my house and my home.
I can stand at my post through the rain and the sleet,
I can sleep in a foxhole with little to eat.
I can carry the weight of killing another,
Or lay down my life with my sister and brother...
Who stand at the front against any and all,
To ensure for all time that this flag will not fall.."
" So go back inside," he said, "harbor no fright,
Your family is waiting and I'll be all right."
"But isn't there something I can do, at the least,
"Give you money," I asked, "or prepare you a feast?
It seems all too little for all that you've done,
For being away from your wife and your son."
Then his eye welled a tear that held no regret,
"Just tell us you love us, and never forget.
To fight for our rights back at home while we're gone,
To stand your own watch, no matter how long.
For when we come home, either standing or dead,
To know you remember we fought and we bled.
Is payment enough, and with that we will trust,
That we mattered to you as you mattered to us."
-------------------------------------------------
PLEASE, would you do me the kind favor of sending this to as many
people as you can?
Christmas is upon us and some credit is due to our U.S service men and women for our being able to celebrate these festivities. Let's try in this small way to pay a tiny bit of what we owe. Make people stop and think of our heroes, living and dead, who sacrificed themselves for us.
By an Anonymous and Gratefull American Citizen
The Gray Rider
The Gray Rider Real Estate Co.-
Friday, December 24, 2010
Thursday, December 23, 2010
SALES OF EXISTING HOMES GAINED GROUND IN NOVEMBER 2010
Existing-home sales got back on an upward path in November 2010, resuming a growth trend since bottoming in July, the National Association of Realtors (NAR) reported Wednesday.
Sales of previously owned homes rose 5.6 percent last month to a seasonally adjusted annual rate of 4.68 million, according to the trade group’s market study. That follows a 2.2 percent drop during the month of October when the annual sales rate was at 4.43 million units.
Distressed homes accounted for 33 percent of the month’s total sales volume. Housing inventory at the end of November fell 4 percent to 3.71 million existing homes available for sale, which represents a 9.5-month supply at the current sales pace. That’s down from a 10.5-month supply in October.
Paul Ashworth, chief U.S. economist for the research firm Capital Economics, says despite the November gains, sales are running at about the same pace we saw during the worst of the financial crisis in the first quarter of 2009. According to Ashworth, home sales are still down by more than a third from the homebuyer tax credit induced rebound earlier this year and down by 40 percent since the peak in 2005.
“Put in that context, it would be more than a stretch to characterize this latest uptick as a meaningful recovery,” he said. “The more appropriate description is that housing is still bouncing along the bottom.”
Still, Lawrence Yun, NAR’s chief economist, says the numbers bode well heading into the new year. “Continuing gains in home sales are encouraging, and the positive impact of steady job creation will more than trump some negative impact from a modest rise in mortgage interest rates, which remain historically favorable,” Yun said.
Yun added that homebuyers are responding to improved affordability conditions. “The relationship recently between mortgage interest rates, home prices, and family income has been the most favorable on record for buying a home since we started measuring in 1970,” he said. “Therefore, the market is recovering and we should trend up to a healthy, sustainable level in 2011.”
NAR’s study shows that the median price for existing-homes sold nationwide in November was $170,600, up 0.4 percent from November 2009.
Foreclosures, which accounted for two-thirds of the distressed sales share last month, sold at a median discount of 15 percent, while short sales were discounted 10 percent in comparison with traditional home sales, according to NAR.
A parallel NAR practitioner survey shows first-time buyers purchased 32 percent of homes in November, the same as in October, but well below their 51 percent share in November 2009 from the surge to beat the initial deadline for the first-time buyer tax credit.
Investors accounted for 19 percent of transactions in November, also unchanged from October, but are up from 12 percent in November 2009. The balance of sales were to repeat buyers.
All-cash sales were at 31 percent in November, up from 29 percent in October and 19 percent a year ago. Yun says the elevated level of all-cash transactions continues to reflect tight credit market conditions.
--------------------
Article by Carrie Bay - http://www.dsnews.com/
Sales of previously owned homes rose 5.6 percent last month to a seasonally adjusted annual rate of 4.68 million, according to the trade group’s market study. That follows a 2.2 percent drop during the month of October when the annual sales rate was at 4.43 million units.
Distressed homes accounted for 33 percent of the month’s total sales volume. Housing inventory at the end of November fell 4 percent to 3.71 million existing homes available for sale, which represents a 9.5-month supply at the current sales pace. That’s down from a 10.5-month supply in October.
Paul Ashworth, chief U.S. economist for the research firm Capital Economics, says despite the November gains, sales are running at about the same pace we saw during the worst of the financial crisis in the first quarter of 2009. According to Ashworth, home sales are still down by more than a third from the homebuyer tax credit induced rebound earlier this year and down by 40 percent since the peak in 2005.
“Put in that context, it would be more than a stretch to characterize this latest uptick as a meaningful recovery,” he said. “The more appropriate description is that housing is still bouncing along the bottom.”
Still, Lawrence Yun, NAR’s chief economist, says the numbers bode well heading into the new year. “Continuing gains in home sales are encouraging, and the positive impact of steady job creation will more than trump some negative impact from a modest rise in mortgage interest rates, which remain historically favorable,” Yun said.
Yun added that homebuyers are responding to improved affordability conditions. “The relationship recently between mortgage interest rates, home prices, and family income has been the most favorable on record for buying a home since we started measuring in 1970,” he said. “Therefore, the market is recovering and we should trend up to a healthy, sustainable level in 2011.”
NAR’s study shows that the median price for existing-homes sold nationwide in November was $170,600, up 0.4 percent from November 2009.
Foreclosures, which accounted for two-thirds of the distressed sales share last month, sold at a median discount of 15 percent, while short sales were discounted 10 percent in comparison with traditional home sales, according to NAR.
A parallel NAR practitioner survey shows first-time buyers purchased 32 percent of homes in November, the same as in October, but well below their 51 percent share in November 2009 from the surge to beat the initial deadline for the first-time buyer tax credit.
Investors accounted for 19 percent of transactions in November, also unchanged from October, but are up from 12 percent in November 2009. The balance of sales were to repeat buyers.
All-cash sales were at 31 percent in November, up from 29 percent in October and 19 percent a year ago. Yun says the elevated level of all-cash transactions continues to reflect tight credit market conditions.
--------------------
Article by Carrie Bay - http://www.dsnews.com/
Thursday, December 16, 2010
NEW MORTGAGE APPLICATIONS FALL AS RATES RISE FOR THE FIFTH STRAIGHT WEEK
Data released by the Mortgage Bankers Association (MBA) Wednesday shows that consumer demand for mortgages waned last week as interest rates soared to their highest level in nearly seven months.
MBA’s index of total mortgage application volume slipped 2.3 percent for the week ending December 10, 2010, when compared to the previous week.
The organization’s index of new applications for home purchases plummeted 5.0 percent from one week earlier, breaking a three-week streak of increases, but MBA says its purchase index remains near levels last seen in early May.
With mortgage interest rates up more than half a percentage point over the past month, it’s no surprise that refinance activity has also declined sharply. MBA’s refinance index decreased 0.7 percent last week, marking the fifth straight weekly decline for the trade group’s gauge.
MBA reported that the average contract interest rate for 30-year fixed-rate mortgages increased to 4.84 percent for the week ending December 10, up from 4.66 percent the week before – nearly a 20 basis point jump in a mere seven days. This is the highest 30-year fixed-rate observed in the group’s weekly survey since the beginning of May
The average contract interest rate for 15-year fixed-rate mortgages climbed 23 basis points to 4.21 percent last week, up from 3.98 percent the previous week. It’s the highest 15-year fixed-rate reported by MBA since the beginning of June.
“Treasury rates increased last week following news that lower tax rates could be extended for another two years, boosting growth prospects. With this move, mortgage rates reached their highest level in more than six months,” said Michael Fratantoni, MBA’s VP of research and economics.
The Federal Reserve held fast to its plan to buy up $600 billion in Treasury securities at its monetary policy meeting Tuesday. The strategy is intended to keep Treasury rates low, and in turn also drive down mortgage interest rates. But it has yet to bear out the desired outcome, as Fratantoni explained, because of other economic factors that are having a greater influence on the markets.
Paul Dales, U.S. senior economist for the research firm Capital Economics, says it is too soon to judge whether the Fed’s latest round of capital infusion, dubbed QE2, has been a success or a failure.
“[I]n recent weeks the economy has picked up momentum. And … the proposed second fiscal stimulus, if signed into law will surely put less of the burden to boost the economy on the Fed,” Dales said.
“These two developments explain why the markets are not convinced that the Fed will complete the $600bn of Treasury purchases announced at the last meeting in early
November,” Dales continued. “Indeed, Treasury yields continued to rise after [Tuesday’s policy meeting]. But the Fed was never going to perform a u-turn and shrink the size of QE2 just six weeks after announcing it.”
---------------------
Article written by Carrie Bay - DSNews.com
MBA’s index of total mortgage application volume slipped 2.3 percent for the week ending December 10, 2010, when compared to the previous week.
The organization’s index of new applications for home purchases plummeted 5.0 percent from one week earlier, breaking a three-week streak of increases, but MBA says its purchase index remains near levels last seen in early May.
With mortgage interest rates up more than half a percentage point over the past month, it’s no surprise that refinance activity has also declined sharply. MBA’s refinance index decreased 0.7 percent last week, marking the fifth straight weekly decline for the trade group’s gauge.
MBA reported that the average contract interest rate for 30-year fixed-rate mortgages increased to 4.84 percent for the week ending December 10, up from 4.66 percent the week before – nearly a 20 basis point jump in a mere seven days. This is the highest 30-year fixed-rate observed in the group’s weekly survey since the beginning of May
The average contract interest rate for 15-year fixed-rate mortgages climbed 23 basis points to 4.21 percent last week, up from 3.98 percent the previous week. It’s the highest 15-year fixed-rate reported by MBA since the beginning of June.
“Treasury rates increased last week following news that lower tax rates could be extended for another two years, boosting growth prospects. With this move, mortgage rates reached their highest level in more than six months,” said Michael Fratantoni, MBA’s VP of research and economics.
The Federal Reserve held fast to its plan to buy up $600 billion in Treasury securities at its monetary policy meeting Tuesday. The strategy is intended to keep Treasury rates low, and in turn also drive down mortgage interest rates. But it has yet to bear out the desired outcome, as Fratantoni explained, because of other economic factors that are having a greater influence on the markets.
Paul Dales, U.S. senior economist for the research firm Capital Economics, says it is too soon to judge whether the Fed’s latest round of capital infusion, dubbed QE2, has been a success or a failure.
“[I]n recent weeks the economy has picked up momentum. And … the proposed second fiscal stimulus, if signed into law will surely put less of the burden to boost the economy on the Fed,” Dales said.
“These two developments explain why the markets are not convinced that the Fed will complete the $600bn of Treasury purchases announced at the last meeting in early
November,” Dales continued. “Indeed, Treasury yields continued to rise after [Tuesday’s policy meeting]. But the Fed was never going to perform a u-turn and shrink the size of QE2 just six weeks after announcing it.”
---------------------
Article written by Carrie Bay - DSNews.com
Friday, December 3, 2010
MORTGAGE RATES ON THE MOVE AGAIN........UPWARD!
They’ve been sitting at half-century lows for months now, but that trend appears to have snapped as mortgage interest rates across the board rose again this week. One industry report released Thursday points out that long-term rates have been heading upward for three weeks straight; another says they’ve now hit a four-month high.
Freddie Mac’s latest survey puts the average rate for 30-year fixed-rate mortgages at 4.46 percent (0.8 point) for the week ending December 2. That’s up from last week’s average of 4.40 percent. Last year at this time, 30-year fixed mortgages were averaging 4.71 percent, according to the GSE.
Freddie’s results are based on data gathered from about 125 lenders nationwide, including thrifts, credit unions, commercial banks, and mortgage lending companies. Rates offered for 15-year fixed mortgages averaged 3.81 percent this week (0.7 point), up from 3.77 percent the week before.
Shorter term mortgage rates also rose in Freddie Mac’s survey. The 5-year adjustable-rate mortgage (ARM) averaged 3.49 percent (0.6 point), up from 3.45 percent last week. The 1-year ARM came in at 3.25 percent (0.6 point), up from 3.23 percent.
Nothaft, VP and chief economist for Freddie Mac, explained that mortgage rates followed bond yields higher this week after newly released economic data suggested the economy may be stronger this quarter than in the third quarter.
A separate study released by Bankrate Thursday called the latest move upward by mortgage rates “notable,” as they hit their highest mark in four months in the company’s survey. Bankrate’s figures are derived from data provided by the top 10 banks and thrifts in the top 10 U.S. markets.
The tracking firm reported that the benchmark conforming 30-year fixed mortgage rate rose to 4.71 percent (0.36 point) this week. That’s up pretty significantly from 4.58 percent reported by the company last week.
The average 15-year fixed mortgage increased from 3.97 percent to 4.07 percent (0.35 point) in Bankrate’s study. The larger jumbo 30-year fixed rate jumped as well, settling at 5.29 percent.
Bankrate also documented a rise in adjustable rate mortgages, with the average 5-year ARM climbing to 3.74 percent and the average 7-year ARM jumping to 4.08 percent.
Bankrate says the November unemployment report due out on Friday could be the catalyst for the next move in mortgage rates, with evidence of solid private-sector job growth fuel for higher rates.
The tracking company’s regular weekly forecast for mortgage rate indicates that we’ll likely see another increase subsequently. Sixty-four percent of the mortgage experts surveyed by Bankrate expect mortgage rates to rise again over the next seven days.
------------------------
Article written by Carrie Bay
http://www.dsnews.com/
Freddie Mac’s latest survey puts the average rate for 30-year fixed-rate mortgages at 4.46 percent (0.8 point) for the week ending December 2. That’s up from last week’s average of 4.40 percent. Last year at this time, 30-year fixed mortgages were averaging 4.71 percent, according to the GSE.
Freddie’s results are based on data gathered from about 125 lenders nationwide, including thrifts, credit unions, commercial banks, and mortgage lending companies. Rates offered for 15-year fixed mortgages averaged 3.81 percent this week (0.7 point), up from 3.77 percent the week before.
Shorter term mortgage rates also rose in Freddie Mac’s survey. The 5-year adjustable-rate mortgage (ARM) averaged 3.49 percent (0.6 point), up from 3.45 percent last week. The 1-year ARM came in at 3.25 percent (0.6 point), up from 3.23 percent.
Nothaft, VP and chief economist for Freddie Mac, explained that mortgage rates followed bond yields higher this week after newly released economic data suggested the economy may be stronger this quarter than in the third quarter.
A separate study released by Bankrate Thursday called the latest move upward by mortgage rates “notable,” as they hit their highest mark in four months in the company’s survey. Bankrate’s figures are derived from data provided by the top 10 banks and thrifts in the top 10 U.S. markets.
The tracking firm reported that the benchmark conforming 30-year fixed mortgage rate rose to 4.71 percent (0.36 point) this week. That’s up pretty significantly from 4.58 percent reported by the company last week.
The average 15-year fixed mortgage increased from 3.97 percent to 4.07 percent (0.35 point) in Bankrate’s study. The larger jumbo 30-year fixed rate jumped as well, settling at 5.29 percent.
Bankrate also documented a rise in adjustable rate mortgages, with the average 5-year ARM climbing to 3.74 percent and the average 7-year ARM jumping to 4.08 percent.
Bankrate says the November unemployment report due out on Friday could be the catalyst for the next move in mortgage rates, with evidence of solid private-sector job growth fuel for higher rates.
The tracking company’s regular weekly forecast for mortgage rate indicates that we’ll likely see another increase subsequently. Sixty-four percent of the mortgage experts surveyed by Bankrate expect mortgage rates to rise again over the next seven days.
------------------------
Article written by Carrie Bay
http://www.dsnews.com/
Friday, November 19, 2010
J.D. POWER AND ASSOCIATES SURVEY SHOWS BORROWER SATISFACTION DECLINING
A study released Thursday by J.D. Power and Associates shows that the time from submission of a mortgage application to approval time has increased by more than a week from the time for approval last year.
In 2009 the average time for approval was 20 days. This year the average is 27.5 days.
In addition to this escalation, the time frame for the entire origination process increased from 46.9 days in 2009 to 52.1 days.
Overall customer satisfaction has decreased five points to 734 from 2009’s level of 739. Satisfaction is measured on a 1,000-point scale.
“While the revised Real Estate Settlement Procedures Act (RESPA) guidelines appear to have streamlined and shortened the time from approval to closing, the unintended consequence is that the application to approval time fame has lengthened and become more complicated,” said David Lo, director of financial services at J.D. Power
He continued, “Ultimately, this longer timeline has a negative impact on overall satisfaction, although there are specific best practices that may mitigate the negative perceptions.”
According to the survey, changes in RESPA resulted in a decrease in the length of time from approval to closing, bringing the average to 24.5 from last year’s 26.9 days.
The 2010 U.S. Primary Mortgage Origination Satisfaction Study is based on responses from more than 3,000 consumers who originated new mortgages. The scale measures satisfaction in four areas of the origination process: application and approval process, loan officer/mortgage brother, closing, and contact.
The Westlake Village, California-based company said the practices most appreciated by customers included providing proactive updates on the status of the loan, providing a welcome acknowledgment after an application is submitted, closing on the promised date, and clearly explaining loan options and ensuring that the customer understands.
Quicken Loans was ranked highest on the satisfaction scale with a score of 826.
Borrowers ranked Bank of America, JP Morgan Chase and Citigroup lowest in the survey, giving them scores of 676, 699 and 691, respectively.
Branch Banking & Trust, last year’s highest ranked company, received a score of 767, a 16 point drop from it score of 783 last year.
-----------------------------------------
Article written by Joy Leopold - DSNews.com
In 2009 the average time for approval was 20 days. This year the average is 27.5 days.
In addition to this escalation, the time frame for the entire origination process increased from 46.9 days in 2009 to 52.1 days.
Overall customer satisfaction has decreased five points to 734 from 2009’s level of 739. Satisfaction is measured on a 1,000-point scale.
“While the revised Real Estate Settlement Procedures Act (RESPA) guidelines appear to have streamlined and shortened the time from approval to closing, the unintended consequence is that the application to approval time fame has lengthened and become more complicated,” said David Lo, director of financial services at J.D. Power
He continued, “Ultimately, this longer timeline has a negative impact on overall satisfaction, although there are specific best practices that may mitigate the negative perceptions.”
According to the survey, changes in RESPA resulted in a decrease in the length of time from approval to closing, bringing the average to 24.5 from last year’s 26.9 days.
The 2010 U.S. Primary Mortgage Origination Satisfaction Study is based on responses from more than 3,000 consumers who originated new mortgages. The scale measures satisfaction in four areas of the origination process: application and approval process, loan officer/mortgage brother, closing, and contact.
The Westlake Village, California-based company said the practices most appreciated by customers included providing proactive updates on the status of the loan, providing a welcome acknowledgment after an application is submitted, closing on the promised date, and clearly explaining loan options and ensuring that the customer understands.
Quicken Loans was ranked highest on the satisfaction scale with a score of 826.
Borrowers ranked Bank of America, JP Morgan Chase and Citigroup lowest in the survey, giving them scores of 676, 699 and 691, respectively.
Branch Banking & Trust, last year’s highest ranked company, received a score of 767, a 16 point drop from it score of 783 last year.
-----------------------------------------
Article written by Joy Leopold - DSNews.com
Friday, October 29, 2010
LONG-TERM MORTGAGE RATES EDGE HIGHER
Mortgage rates are still incredibly low by historical standards. They’ve been fluctuating around record lows not seen in more than a half-century for a good many months now. This week was one where that movement was upward, according to industry data released Thursday.
A nationwide survey conducted by Freddie Mac found that 30-year fixed-rate mortgages averaged 4.23 percent (0.8 point) for the week ending October 28. That’s up from last week’s average of 4.21 percent, and the second consecutive time in the past six weeks 30-year rates have risen.
Rates for 15-year fixed mortgages averaged 3.66 percent (0.7 point) this week in Freddie’s study. Last week, the 15-year rate came in at 3.64 percent.
The GSE reported that rates for adjustable-rate mortgage (ARMs), on the other hand, are heading lower. The 5-year ARM averaged 3.41 percent this week (0.6 point), down from last week when it was 3.45 percent. The 5-year ARM has not been lower since Freddie Mac started tracking it in January 2005.
Frank Nothaft, VP and chief economist at Freddie Mac, says the historically low rates are supporting home sales and reducing the excess stock of homes available for sale.
He notes that existing home sales, including condominiums and co-ops, rose for the second consecutive month in September, up almost 18.0 percent over July’s low.
Similarly, sales of new homes had back-to-back increases and were 7.7 percent above July. Nothaft pointed out that the inventory of new homes for sale has either stayed the same or declined every month of this year.
A separate study released by Bankrate Thursday, which is based on data provided by the top 10 banks and thrifts in the top 10 U.S. markets, also showed that mortgage rates jumped after five weeks of record-low readings and returned to levels last seen one month ago.
The tracking company reported that the average rate on the benchmark conforming 30-year fixed mortgage moved up to 4.51 percent (0.33 point) this week from 4.22 percent last week.
The average 15-year fixed mortgage rate climbed to 3.90 percent (0.33 point) in Bankrate’s survey, up from 3.82 percent the week prior, while the larger jumbo 30-year fixed rate reversed last week’s decline, returning to 5.10 percent.
Bankrate says adjustable-rate mortgages were higher also, with the average 5-year ARM rising to 3.67 percent and the average 7-year ARM rebounding to 3.95 percent.
Bankrate noted in its report that even though the Federal Reserve is poised to announce renewed efforts to boost the economy, it doesn’t automatically mean lower mortgage rates.
“Investors tempering their expectations were behind the increase seen this week and if inflation worries increase once specifics of the Fed’s bond-buying are announced, mortgage rates could continue moving higher. Time will tell just what impact the Fed has on mortgage rates and the overall economy,” Bankrate said.
-------------------------------
Article written by Carrie Bay - http://www.dsnews.com/
A nationwide survey conducted by Freddie Mac found that 30-year fixed-rate mortgages averaged 4.23 percent (0.8 point) for the week ending October 28. That’s up from last week’s average of 4.21 percent, and the second consecutive time in the past six weeks 30-year rates have risen.
Rates for 15-year fixed mortgages averaged 3.66 percent (0.7 point) this week in Freddie’s study. Last week, the 15-year rate came in at 3.64 percent.
The GSE reported that rates for adjustable-rate mortgage (ARMs), on the other hand, are heading lower. The 5-year ARM averaged 3.41 percent this week (0.6 point), down from last week when it was 3.45 percent. The 5-year ARM has not been lower since Freddie Mac started tracking it in January 2005.
Frank Nothaft, VP and chief economist at Freddie Mac, says the historically low rates are supporting home sales and reducing the excess stock of homes available for sale.
He notes that existing home sales, including condominiums and co-ops, rose for the second consecutive month in September, up almost 18.0 percent over July’s low.
Similarly, sales of new homes had back-to-back increases and were 7.7 percent above July. Nothaft pointed out that the inventory of new homes for sale has either stayed the same or declined every month of this year.
A separate study released by Bankrate Thursday, which is based on data provided by the top 10 banks and thrifts in the top 10 U.S. markets, also showed that mortgage rates jumped after five weeks of record-low readings and returned to levels last seen one month ago.
The tracking company reported that the average rate on the benchmark conforming 30-year fixed mortgage moved up to 4.51 percent (0.33 point) this week from 4.22 percent last week.
The average 15-year fixed mortgage rate climbed to 3.90 percent (0.33 point) in Bankrate’s survey, up from 3.82 percent the week prior, while the larger jumbo 30-year fixed rate reversed last week’s decline, returning to 5.10 percent.
Bankrate says adjustable-rate mortgages were higher also, with the average 5-year ARM rising to 3.67 percent and the average 7-year ARM rebounding to 3.95 percent.
Bankrate noted in its report that even though the Federal Reserve is poised to announce renewed efforts to boost the economy, it doesn’t automatically mean lower mortgage rates.
“Investors tempering their expectations were behind the increase seen this week and if inflation worries increase once specifics of the Fed’s bond-buying are announced, mortgage rates could continue moving higher. Time will tell just what impact the Fed has on mortgage rates and the overall economy,” Bankrate said.
-------------------------------
Article written by Carrie Bay - http://www.dsnews.com/
Thursday, October 21, 2010
KINDERHOOK BANK CORP. TO ACQUIRE VALLEY MORTGAGE
Robert A. Sherwood, President and CEO of Kinderhook Bank Corp. (the “Company”) announced today that the Company has executed a letter of intent to acquire Valley Mortgage Company, Inc., (“Valley Mortgage”) a New York State registered mortgage brokerage firm headquartered in Hudson, New York.
Seth Rapport, President of Valley Mortgage, will continue as President of the company which works with local, regional and national lenders to offer a full range of mortgage products. Founded by Mr. Rapport in 1996, Valley Mortgage Company arranges financing for real estate located throughout New York State. The acquisition is subject to the parties
entering into a definitive purchase agreement, obtaining all regulatory approvals, and other terms and conditions. It is anticipated that the acquisition transaction will be completed in the first quarter of 2011.
“Valley Mortgage Company has grown today to become one of the most respected mortgage companies serving the Hudson Valley and Metropolitan New York areas,” stated Mr. Sherwood. “We are pleased to have Valley Mortgage become part of our company because like Kinderhook Bank, Seth is well known for his emphasis on exceptional customer service and high ethical standards,” Mr. Sherwood added.
Mr. Rapport stated, “Becoming part of Kinderhook Bank Corp. is very exciting for us as I believe this affiliation will favorably impact current and future customers as well as to expand our services and generate growth. I look forward to continuing to serve as President of Valley Mortgage Company well into the future.” Valley Mortgage Company will continue its brokerage operations and expand Kinderhook Bank’s product offering to include programs through Fannie Mae, Freddie Mac, FHA, VA and Rural Housing Services.
Kinderhook Bank Corp. is the parent company of The National Union Bank of Kinderhook, with five branch locations in Columbia and Rensselaer counties, New York and Kleeber Insurance Services, with locations in Valatie and East Greenbush, New York. Kinderhook
Seth Rapport, President of Valley Mortgage, will continue as President of the company which works with local, regional and national lenders to offer a full range of mortgage products. Founded by Mr. Rapport in 1996, Valley Mortgage Company arranges financing for real estate located throughout New York State. The acquisition is subject to the parties
entering into a definitive purchase agreement, obtaining all regulatory approvals, and other terms and conditions. It is anticipated that the acquisition transaction will be completed in the first quarter of 2011.
“Valley Mortgage Company has grown today to become one of the most respected mortgage companies serving the Hudson Valley and Metropolitan New York areas,” stated Mr. Sherwood. “We are pleased to have Valley Mortgage become part of our company because like Kinderhook Bank, Seth is well known for his emphasis on exceptional customer service and high ethical standards,” Mr. Sherwood added.
Mr. Rapport stated, “Becoming part of Kinderhook Bank Corp. is very exciting for us as I believe this affiliation will favorably impact current and future customers as well as to expand our services and generate growth. I look forward to continuing to serve as President of Valley Mortgage Company well into the future.” Valley Mortgage Company will continue its brokerage operations and expand Kinderhook Bank’s product offering to include programs through Fannie Mae, Freddie Mac, FHA, VA and Rural Housing Services.
Kinderhook Bank Corp. is the parent company of The National Union Bank of Kinderhook, with five branch locations in Columbia and Rensselaer counties, New York and Kleeber Insurance Services, with locations in Valatie and East Greenbush, New York. Kinderhook
Wednesday, October 13, 2010
ECONOMISTS SAY HOME PRICES HAVE ALREADY HIT BOTTOM
Home prices in the United States found their floor during the early part of 2010 and are expected to begin trending upward next year, according to a panel of elite economists surveyed by the National Association for Business Economics (NABE) for its October 2010 Outlook.
“The housing recovery is intact, but tepid overall. Home prices have hit bottom,” NABE stated in its report outlining the survey results.
The panel anticipated a 1.5 percent drop in residential home values this year, and that decline has already been registered through the first half of 2010, NABE explained.
The group of economists is projecting gains in home prices of 1.2 percent over the course of 2011, but they warn that the modest increase will not keep up with the broader measures of inflation.
NABE panelists expect any evidence of price weakness post-tax incentive to be temporary. Their assessments of the importance of the government’s recent stimulus measures in the form of tax breaks for homebuyers vary widely. Nearly one-third feel that a persistent relapse will follow the incentives’ expiration, while the remaining two-thirds believe an underlying recovery is in place.
When it comes to the distressed side of the business, it’s become clear that the nation’s high level of unemployment is now one of the primary triggers of default among struggling homeowners. Getting more people back to work is key to a recovery in housing and getting a handle on still-rising delinquency numbers. But NABE’s panel warns that labor market conditions will be slow to improve.
The economists are forecasting monthly payroll gains to average 150,000 or less until the latter half of 2011, at which time gains will improve to a range of 170,000 to 175,000. The unemployment rate is expected to persist at over 9.5 percent through midyear 2011, before easing only slightly to 9.2 percent by the end of next year.
“This will mark the worst post-recession job recovery on record,” NABE said.
NABE panelists trimmed their projections on overall economic growth. Those projections now remain sub-par through year-end, the organization explained.
“This summer’s slowdown has exposed the economy’s sensitivity to wealth losses, the unwinding of debt, and the reductions in economic stimulus,” said Richard Wobbekind, NABE president-elect and associate dean of the Leeds School of Business at the University of Colorado-Boulder. “Confidence in the expansion’s durability is intact, but recent economic weakness has prompted many panelists to scale back expectations for the year ahead.”
The October 2010 NABE Outlook presents the consensus of macroeconomic forecasts from a panel of 46 professional analysts. The group included economists from such firms as Moody’s Analytics, the PMI Group, Fannie Mae, and Goldman Sachs.
©2010 DS News. All Rights Reserved.
-----------------------------
Article written by Carrie Bay - http://www.dsnews.com/
“The housing recovery is intact, but tepid overall. Home prices have hit bottom,” NABE stated in its report outlining the survey results.
The panel anticipated a 1.5 percent drop in residential home values this year, and that decline has already been registered through the first half of 2010, NABE explained.
The group of economists is projecting gains in home prices of 1.2 percent over the course of 2011, but they warn that the modest increase will not keep up with the broader measures of inflation.
NABE panelists expect any evidence of price weakness post-tax incentive to be temporary. Their assessments of the importance of the government’s recent stimulus measures in the form of tax breaks for homebuyers vary widely. Nearly one-third feel that a persistent relapse will follow the incentives’ expiration, while the remaining two-thirds believe an underlying recovery is in place.
When it comes to the distressed side of the business, it’s become clear that the nation’s high level of unemployment is now one of the primary triggers of default among struggling homeowners. Getting more people back to work is key to a recovery in housing and getting a handle on still-rising delinquency numbers. But NABE’s panel warns that labor market conditions will be slow to improve.
The economists are forecasting monthly payroll gains to average 150,000 or less until the latter half of 2011, at which time gains will improve to a range of 170,000 to 175,000. The unemployment rate is expected to persist at over 9.5 percent through midyear 2011, before easing only slightly to 9.2 percent by the end of next year.
“This will mark the worst post-recession job recovery on record,” NABE said.
NABE panelists trimmed their projections on overall economic growth. Those projections now remain sub-par through year-end, the organization explained.
“This summer’s slowdown has exposed the economy’s sensitivity to wealth losses, the unwinding of debt, and the reductions in economic stimulus,” said Richard Wobbekind, NABE president-elect and associate dean of the Leeds School of Business at the University of Colorado-Boulder. “Confidence in the expansion’s durability is intact, but recent economic weakness has prompted many panelists to scale back expectations for the year ahead.”
The October 2010 NABE Outlook presents the consensus of macroeconomic forecasts from a panel of 46 professional analysts. The group included economists from such firms as Moody’s Analytics, the PMI Group, Fannie Mae, and Goldman Sachs.
©2010 DS News. All Rights Reserved.
-----------------------------
Article written by Carrie Bay - http://www.dsnews.com/
Friday, October 1, 2010
MORTGAGE RATES FALL TO NEW LOWS......AGAIN!
How low can we go? When it comes to mortgage rates, the floor keeps dropping. Industry reports released Thursday show that interest rates for home loans – already at their lowest marks in more than a half-century – dropped again this week.
Market analysis conducted by Freddie Mac found that the 30-year fixed-rate mortgage (FRM) averaged 4.32 percent (0.8 point) for the week ending September 30, 2010. That’s down from 4.37 percent last week and tied with the all-time low in Freddie’s survey set four weeks ago.
The GSE reported that the 15-year FRM this week averaged a new record low of 3.75 percent (0.7 point). Last week, it came in at 3.82 percent.
The 5-year adjustable-rate mortgage (ARM) dropped to an average of 3.52 percent this week (0.6 point), according to Freddie Mac, also setting a new record low. The 1-year ARM rose slightly to 3.48 percent (0.7 point).
“Confidence in the state of the economy fell among consumers and businesses, which led to a decline in long-term bond yields and brought many mortgage rates to record lows this week,” said Frank Nothaft, Freddie Mac’s VP and chief economist.
Weakening confidence in the economy’s trajectory was evident despite notable improvements in household balance sheets. Nothaft cited a Federal Reserve report, which shows that homeowners have regained $1.0 trillion in home equity as of the second quarter of 2010, after losing more than $7.5 trillion over the three-year period ending in the first quarter of 2009.
A separate weekly study by Bankrate also put mortgage interest rates at record-lows. Bankrates survey is based on data gathered from the top 10 banks and thrifts in the top 10 U.S. markets.
The tracking company reported that rates for conforming 30-year fixed mortgages remained unchanged this week at their 4.5 percent low (0.36 point).
The average 15-year fixed mortgage retreated to 3.94 percent (0.31 point), down from 3.96 percent last week, while the larger jumbo 30-year fixed rate inched lower to 5.16 percent.
Bankrate says adjustable rate mortgages hit new lows also, with the average 5-year ARM decreasing to 3.68 percent and the average 7-year ARM falling to 3.91 percent.
According to Bankrate, mortgage rates remain at record lows, not as a result of poor economic data, but rather in expectation of additional efforts by the Federal Reserve to revive the economy.
“Specifically, investors are counting on the Fed to resume quantitative easing – purchases of government bonds in an effort to drive market interest rates even lower,” the company said in its report. “Investors have been front-running the Fed by buying government debt now, bringing bond yields to ultra-low levels. Mortgage bond investors are pricing for the risk that loans could be refinanced if the Fed’s efforts reduce mortgage rates further.”
-------------------
Article writen by Carrie Bay - DSNews.com
Market analysis conducted by Freddie Mac found that the 30-year fixed-rate mortgage (FRM) averaged 4.32 percent (0.8 point) for the week ending September 30, 2010. That’s down from 4.37 percent last week and tied with the all-time low in Freddie’s survey set four weeks ago.
The GSE reported that the 15-year FRM this week averaged a new record low of 3.75 percent (0.7 point). Last week, it came in at 3.82 percent.
The 5-year adjustable-rate mortgage (ARM) dropped to an average of 3.52 percent this week (0.6 point), according to Freddie Mac, also setting a new record low. The 1-year ARM rose slightly to 3.48 percent (0.7 point).
“Confidence in the state of the economy fell among consumers and businesses, which led to a decline in long-term bond yields and brought many mortgage rates to record lows this week,” said Frank Nothaft, Freddie Mac’s VP and chief economist.
Weakening confidence in the economy’s trajectory was evident despite notable improvements in household balance sheets. Nothaft cited a Federal Reserve report, which shows that homeowners have regained $1.0 trillion in home equity as of the second quarter of 2010, after losing more than $7.5 trillion over the three-year period ending in the first quarter of 2009.
A separate weekly study by Bankrate also put mortgage interest rates at record-lows. Bankrates survey is based on data gathered from the top 10 banks and thrifts in the top 10 U.S. markets.
The tracking company reported that rates for conforming 30-year fixed mortgages remained unchanged this week at their 4.5 percent low (0.36 point).
The average 15-year fixed mortgage retreated to 3.94 percent (0.31 point), down from 3.96 percent last week, while the larger jumbo 30-year fixed rate inched lower to 5.16 percent.
Bankrate says adjustable rate mortgages hit new lows also, with the average 5-year ARM decreasing to 3.68 percent and the average 7-year ARM falling to 3.91 percent.
According to Bankrate, mortgage rates remain at record lows, not as a result of poor economic data, but rather in expectation of additional efforts by the Federal Reserve to revive the economy.
“Specifically, investors are counting on the Fed to resume quantitative easing – purchases of government bonds in an effort to drive market interest rates even lower,” the company said in its report. “Investors have been front-running the Fed by buying government debt now, bringing bond yields to ultra-low levels. Mortgage bond investors are pricing for the risk that loans could be refinanced if the Fed’s efforts reduce mortgage rates further.”
-------------------
Article writen by Carrie Bay - DSNews.com
Friday, September 24, 2010
NAR: EXISTING HOME SALES REBOUND 7.6% IN THE USA
Sales figures for previously owned homes rose in August following a big correction in July, according to data released by the National Association of Realtors (NAR) Thursday. The trade group’s existing-home sales report showed a 7.6 percent increase in transactions during the month, bumping the annualized sales pace to 4.13 million homes.
That’s up from a revised sales pace of 3.84 million the previous month, after sales plunged 27 percent in July – the worst showing for existing-home sales in nearly 15 years.
Sales transactions for pre-owned homes remain 19 percent below the 5.10 million-unit pace recorded a year ago.
The research firm IHS Global Insight said the month-to-month rise was in line with expectations, but called the results “disappointing nonetheless,” noting that housing demand remains weak and mortgage applications to buy homes have been stagnant since collapsing in May.
“We are not expecting worse sales numbers going forward, just a long climb out of a deep hole,” said Patrick Newport, U.S. economist for IHS. Newport says the path to recovery in housing will be through the labor market, and as a result, he’s doesn’t anticipate sales to climb above the 6.0 million mark – a number he says would accompany “normal conditions” – until 2013.
According to NAR’s report, the sales share of distressed homes rose to 34 percent in August, up from 32 percent the month prior. First-time buyers purchased 31 percent of homes last month, compared to 38 percent in July.
NAR says the national median existing-home price was $178,600 in August, up 0.8 percent from August 2009.
The analysts at Capital Economics contend that the current weakness of demand relative to the high level of supply suggests home prices still have further to fall.
The August rebound did pare housing inventory down to 3.98 million existing homes available for sale, resulting in the months’ supply of unsold properties falling from 12.5 to 11.6.
But as Paul Dales, U.S. economist for Capital Economics, explained, that is still well above the 6-7 months that has historically been consistent with stable prices.
----------------------------
Article written by Carrie Bay - DSNews.com
That’s up from a revised sales pace of 3.84 million the previous month, after sales plunged 27 percent in July – the worst showing for existing-home sales in nearly 15 years.
Sales transactions for pre-owned homes remain 19 percent below the 5.10 million-unit pace recorded a year ago.
The research firm IHS Global Insight said the month-to-month rise was in line with expectations, but called the results “disappointing nonetheless,” noting that housing demand remains weak and mortgage applications to buy homes have been stagnant since collapsing in May.
“We are not expecting worse sales numbers going forward, just a long climb out of a deep hole,” said Patrick Newport, U.S. economist for IHS. Newport says the path to recovery in housing will be through the labor market, and as a result, he’s doesn’t anticipate sales to climb above the 6.0 million mark – a number he says would accompany “normal conditions” – until 2013.
According to NAR’s report, the sales share of distressed homes rose to 34 percent in August, up from 32 percent the month prior. First-time buyers purchased 31 percent of homes last month, compared to 38 percent in July.
NAR says the national median existing-home price was $178,600 in August, up 0.8 percent from August 2009.
The analysts at Capital Economics contend that the current weakness of demand relative to the high level of supply suggests home prices still have further to fall.
The August rebound did pare housing inventory down to 3.98 million existing homes available for sale, resulting in the months’ supply of unsold properties falling from 12.5 to 11.6.
But as Paul Dales, U.S. economist for Capital Economics, explained, that is still well above the 6-7 months that has historically been consistent with stable prices.
----------------------------
Article written by Carrie Bay - DSNews.com
Thursday, September 23, 2010
MORTGAGE DEFAULT RISK DIMINISHES AS CONSUMER CREDIT CONDITIONS IMPROVE
The credit bureau TransUnion says U.S. consumers are less of a credit risk now than they were in 2009 and earlier this year.
The Chicago-based agency’s proprietary Credit Risk Index (CRI) declined 117 basis points, or 0.9 percent, between the first and second quarters of 2010. The drop was more than double the decrease observed between the fourth quarter of 2009 and the first quarter of 2010.
TransUnion says this decrease is the second decline in as many quarters and is a harbinger of the moderate improvements in delinquency rates reported by the company in August across all credit sectors.
The CRI is now 5 percent lower than it was a year ago. The index “is a stronger leading indicator of consumer credit risk and is much more highly correlated to consumer delinquency rates than the average credit score,” according to TransUnion.
At the end of the second quarter in 2010, 46 states and the District of Columbia experienced declines in their respective credit risk indices, “signaling that a broad improvement in consumer credit conditions is finally taking root,” TransUnion said. Only Alaska, Hawaii, Idaho, and North Carolina experienced increases in their consumer credit risk readings.
“We are optimistic that, short term, the Credit Risk Index will to continue to experience small declines. Consumer delinquency rates should continue to decrease as employment conditions improve,” said Chet Wiermanski, global chief scientist at TransUnion.
“Long term, we are encouraged by the great lengths consumers have taken to reduce their debt burden, which possibly represents a fundamental paradigm shift in consumer behavior,” Wiermanski added. “After experiencing the most difficult economic times in two generations, it appears that consumers are relearning how to manage their existing credit obligations and live within their means.”
TransUnion also analyzed how university cities fared compared to other large cities in their state in terms of consumer credit risk. The company found that cities that were home to a university were 12.5 percent less risky than their same-state counterparts without a college campus.
For mortgages, the average 90-day delinquency rate for university cities was 5 percent, compared to 8.9 percent for the largest cities.
Wiermanski says a relatively stable employment picture and a captive consumer base with disposable income are two reasons driving these results.
TransUnion’s analysis sourced from a database of 27 million randomly sampled consumer records.
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Article written by Carrie Bay - DSNews.com
The Chicago-based agency’s proprietary Credit Risk Index (CRI) declined 117 basis points, or 0.9 percent, between the first and second quarters of 2010. The drop was more than double the decrease observed between the fourth quarter of 2009 and the first quarter of 2010.
TransUnion says this decrease is the second decline in as many quarters and is a harbinger of the moderate improvements in delinquency rates reported by the company in August across all credit sectors.
The CRI is now 5 percent lower than it was a year ago. The index “is a stronger leading indicator of consumer credit risk and is much more highly correlated to consumer delinquency rates than the average credit score,” according to TransUnion.
At the end of the second quarter in 2010, 46 states and the District of Columbia experienced declines in their respective credit risk indices, “signaling that a broad improvement in consumer credit conditions is finally taking root,” TransUnion said. Only Alaska, Hawaii, Idaho, and North Carolina experienced increases in their consumer credit risk readings.
“We are optimistic that, short term, the Credit Risk Index will to continue to experience small declines. Consumer delinquency rates should continue to decrease as employment conditions improve,” said Chet Wiermanski, global chief scientist at TransUnion.
“Long term, we are encouraged by the great lengths consumers have taken to reduce their debt burden, which possibly represents a fundamental paradigm shift in consumer behavior,” Wiermanski added. “After experiencing the most difficult economic times in two generations, it appears that consumers are relearning how to manage their existing credit obligations and live within their means.”
TransUnion also analyzed how university cities fared compared to other large cities in their state in terms of consumer credit risk. The company found that cities that were home to a university were 12.5 percent less risky than their same-state counterparts without a college campus.
For mortgages, the average 90-day delinquency rate for university cities was 5 percent, compared to 8.9 percent for the largest cities.
Wiermanski says a relatively stable employment picture and a captive consumer base with disposable income are two reasons driving these results.
TransUnion’s analysis sourced from a database of 27 million randomly sampled consumer records.
-----------------------
Article written by Carrie Bay - DSNews.com
Tuesday, September 14, 2010
MARKET FORECASTS FOR HOME PRICES CONTINUE TO DARKEN
Home prices have hit upon relatively stable ground in recent months – a welcome reprieve from the freefall days most markets had grown acutely accustomed to after the reverberating bursting of the housing bubble. But that stability may be fleeting. If you heed the words of the seers keeping a close watch over industry trends and movements in price lines, you should be bracing for another decline in property values, as the elusive floor drops a little lower.
The analysts at Moody’s Investors Service say they don’t expect the national house price index to find its bottom until the early half of next year. And even then, they warn that price appreciation will remain weak for at least the next couple of years.
Fiserv expects to see prices bounce up and down around their lows for the next two to three years. A recent forecast from the company paints a picture of particularly steep declines in markets that have been hit the hardest by the housing downturn.
In Nevada, Fiserv projects that by the first quarter of 2011, home prices will be 11.1 percent below Q1 2010 levels. In Arizona the company predicts an annual decline of 10.8 percent by March of next year, and Florida is likely to see prices fall another 8.8 percent.
Barclays Capital says it expects depressed readings in home prices for the next five to ten months, with national property value gauges ultimately bottoming 7 percent from current levels in the first quarter of 2011.
MacroMarkets LLC recently announced the results of its August 2010 Home Price Expectations Survey, compiled from 107 responses of a diverse group of economists, real estate experts, and investment and market strategists.
“For the third consecutive month, the consensus from the experts indicates weakened overall confidence in the U.S. housing recovery,” said Robert Shiller, MacroMarkets co-founder and namesake of the closely-watched Case-Shiller Home Price Index.
Shiller says only 21 percent of the surveyed panelists now predict positive growth in home prices nationwide for 2010. The majority of the respondents expect annual U.S. home price appreciation will not exceed 3.58 percent until 2014.
“Any real improvement in the nation’s economic health will depend on improvement in home prices,” according to Michael Feder, president and CEO of the real estate data and analytics firm Radar Logic.
“Weakening housing demand, coupled with a large and growing supply of unsold homes, make it likely that housing prices will fall by the end of the year, perhaps to new lows,” Feder added. “If home prices make another large move downward, the odds of a second U.S. economic downturn likely will increase.”
------------------------
Article written by Carrie Bay - http://www.dsnews.com/
The analysts at Moody’s Investors Service say they don’t expect the national house price index to find its bottom until the early half of next year. And even then, they warn that price appreciation will remain weak for at least the next couple of years.
Fiserv expects to see prices bounce up and down around their lows for the next two to three years. A recent forecast from the company paints a picture of particularly steep declines in markets that have been hit the hardest by the housing downturn.
In Nevada, Fiserv projects that by the first quarter of 2011, home prices will be 11.1 percent below Q1 2010 levels. In Arizona the company predicts an annual decline of 10.8 percent by March of next year, and Florida is likely to see prices fall another 8.8 percent.
Barclays Capital says it expects depressed readings in home prices for the next five to ten months, with national property value gauges ultimately bottoming 7 percent from current levels in the first quarter of 2011.
MacroMarkets LLC recently announced the results of its August 2010 Home Price Expectations Survey, compiled from 107 responses of a diverse group of economists, real estate experts, and investment and market strategists.
“For the third consecutive month, the consensus from the experts indicates weakened overall confidence in the U.S. housing recovery,” said Robert Shiller, MacroMarkets co-founder and namesake of the closely-watched Case-Shiller Home Price Index.
Shiller says only 21 percent of the surveyed panelists now predict positive growth in home prices nationwide for 2010. The majority of the respondents expect annual U.S. home price appreciation will not exceed 3.58 percent until 2014.
“Any real improvement in the nation’s economic health will depend on improvement in home prices,” according to Michael Feder, president and CEO of the real estate data and analytics firm Radar Logic.
“Weakening housing demand, coupled with a large and growing supply of unsold homes, make it likely that housing prices will fall by the end of the year, perhaps to new lows,” Feder added. “If home prices make another large move downward, the odds of a second U.S. economic downturn likely will increase.”
------------------------
Article written by Carrie Bay - http://www.dsnews.com/
Friday, September 10, 2010
FIVE MISTAKES HOME BUYERS MAKE
Home buyers are an increasingly rare breed these days. Many who were eager to buy a house raced to take advantage of federal homebuyer tax credits. When those government perks expired in April, home sales essentially went into deep freeze, plummeting to levels not seen in more than a decade, according to the latest numbers from the National Association of Realtors.
Still, the Realtors project that nearly 4 million existing homes will sell in 2010. First-time buyers, without the burden of a home to sell, could benefit from the foul market–and the record low mortgage rates.
But woe to the overconfident buyer. Here are five common missteps that first-time home buyers make.
1. SNUBBING THE REAL ESTATE AGENT
With so many websites offering a mass of data on listings, who needs an agent? Most people, actually. Finding a house and figuring out comps–the price of comparable homes on the market–is the easy part. Managing the nuances of offers, inspections, financing and all the other pivotal steps to buying a home is where many new buyers tend to get tripped up, says Shii Ann Huang, an associate broker with The Corcoran Group in New York.
When you hire an agent to act as your "buyer's representative," she's obligated to put your interests first, even if her commission is paid by the seller and based on the sale price. Skeptical? That's all the more reason to find an agent on your terms. Ask friends and acquaintances for referrals and interview two or three candidates before deciding.
But don't let the agent find you. When Viviane Ugalde and her husband, both physicians, bought their first home in Sacramento nearly two decades ago they made this mistake. "We stumbled onto an agent when she saw us peeking in the windows of an empty house for sale," Ms. Ugalde recalls. The agent, who happened to live on the same block, came out of her house (wearing pajamas), offered to show the couple around the neighborhood, and ultimately helped them find a house. Then the agent, who was new to real estate, neglected to show up for the closing. "It was scary and confusing signing what seemed like a thousand pages," says Ms. Ugalde.
2. GUESSTIMATING HOW N=MUCH YOU CAN AFFORD
Many buyers mistakenly take a do-it-yourself approach to financing. They use online calculators to estimate how much house they can afford, dive into the house hunt and then get a dose of cold water when lenders refuse to qualify them for that amount. "The process is so different than it was four or five years ago," says Diann Patton, a broker with Coldwell Banker in Grass Valley, Calif. Not only are lenders reading loan applications closely, she says, they're verifying employment and running credit checks multiple times during the process.
Make a date with a mortgage broker or banker before you get serious about your search, says Ms. Patton. Remember, too, that the costs of buying and owning a home go well beyond the sticker price. While online calculators do take into account property tax and insurance, it's up to you to account for maintenance costs, moving fees and association dues.
3. LETTING CHARM CLOUD YOUR JUDGEMENT
No one will fault you for falling hard for a charming older home. But, unless the house has been painstakingly remodeled or you're prepared to pay for repairs and upgrades, an old house can quickly lose its allure. Last year Alison Koop, a public relations manager for the University of Washington, came dangerously close to saying "I do" to a seemingly fabulous mid-century home in northeastern Seattle. Ms. Koop was so smitten with the big windows and vaulted ceilings in the living room that she neglected to notice the exposed wires, shoddy roof and other structural problems. Any delusions Ms. Koop had were laid to rest in the guest bathroom. "When the inspector turned the faucet on," she says, "the spigot fell off, hitting the floor of the tub with an exclamatory thunk."
If you're considering an old home, don't let the inspection be your last line of defense, says Jay Papasan, vice president of publishing at Keller Williams Realty. "Negotiate a long due diligence period," he says. That gives you time to get real estimates from contractors and back out if need be.
Of course, new homes aren't without their drawbacks. Recently, many newly built homes experienced serious problems with Chinese-made drywall, for example. Proceed with care whatever the home's age.
4. FOCUSING ON THE HOUSE, NOT THE NEIGHBORHOOD
In hindsight, many buyers say they wish they'd taken their due diligence a few steps further to really get to know all the perks, quirks and hassles of living in a particular place. You can always fix up the house, but there's no easy remedy for annoying neighbors, oppressive homeowner association rules and marathon commutes. When Laurie Tarkan and her husband bought their first home in 2001 they were so infatuated with the circa-1924 three-bedroom cottage that–in addition to brushing over some of the headaches of an old house –they didn't give a whole lot of thought to its somewhat out-of-the-way location about a mile from downtown Maplewood, N.J., a popular New York suburb. "As a first-time buyer you're not aware of all the things you should think about that aren't about the house," says Ms. Tarkan, who after living in New York City for 17 years, still hasn't gotten used to driving everywhere.
Spend as much time as you can in your future neighborhood, ideally on different days and times. Eat in the restaurants, drop in a yoga class, test drive your commute.
5. MAKING ARBITRARY OFFERS
With housing inventory running high and sales at record lows, in most markets, there's no shortage of houses for sale and sellers desperate to get out from under them–all the more reason to hold out for the right house and the right price. But when you find that perfect house, don't assume you can lob a lowball offer or make unreasonable demands. Even in hard-hit markets, nice houses in desirable neighborhoods are fetching multiple bids.
If the house has been on the market for months, you probably don't need to worry about other buyers lining up behind you. Make an offer based on recent sales for comparable homes, foreclosure activity and market trends, and don't be afraid to start the bidding low. If the house is fresh on the market (or recently foreclosed) and other buyers are circling the block, put your best foot forward but don't get suckered into a bidding war.
--------------------------------------
Article written by Sarah Max - Wall Street Journal - Real Estate
Still, the Realtors project that nearly 4 million existing homes will sell in 2010. First-time buyers, without the burden of a home to sell, could benefit from the foul market–and the record low mortgage rates.
But woe to the overconfident buyer. Here are five common missteps that first-time home buyers make.
1. SNUBBING THE REAL ESTATE AGENT
With so many websites offering a mass of data on listings, who needs an agent? Most people, actually. Finding a house and figuring out comps–the price of comparable homes on the market–is the easy part. Managing the nuances of offers, inspections, financing and all the other pivotal steps to buying a home is where many new buyers tend to get tripped up, says Shii Ann Huang, an associate broker with The Corcoran Group in New York.
When you hire an agent to act as your "buyer's representative," she's obligated to put your interests first, even if her commission is paid by the seller and based on the sale price. Skeptical? That's all the more reason to find an agent on your terms. Ask friends and acquaintances for referrals and interview two or three candidates before deciding.
But don't let the agent find you. When Viviane Ugalde and her husband, both physicians, bought their first home in Sacramento nearly two decades ago they made this mistake. "We stumbled onto an agent when she saw us peeking in the windows of an empty house for sale," Ms. Ugalde recalls. The agent, who happened to live on the same block, came out of her house (wearing pajamas), offered to show the couple around the neighborhood, and ultimately helped them find a house. Then the agent, who was new to real estate, neglected to show up for the closing. "It was scary and confusing signing what seemed like a thousand pages," says Ms. Ugalde.
2. GUESSTIMATING HOW N=MUCH YOU CAN AFFORD
Many buyers mistakenly take a do-it-yourself approach to financing. They use online calculators to estimate how much house they can afford, dive into the house hunt and then get a dose of cold water when lenders refuse to qualify them for that amount. "The process is so different than it was four or five years ago," says Diann Patton, a broker with Coldwell Banker in Grass Valley, Calif. Not only are lenders reading loan applications closely, she says, they're verifying employment and running credit checks multiple times during the process.
Make a date with a mortgage broker or banker before you get serious about your search, says Ms. Patton. Remember, too, that the costs of buying and owning a home go well beyond the sticker price. While online calculators do take into account property tax and insurance, it's up to you to account for maintenance costs, moving fees and association dues.
3. LETTING CHARM CLOUD YOUR JUDGEMENT
No one will fault you for falling hard for a charming older home. But, unless the house has been painstakingly remodeled or you're prepared to pay for repairs and upgrades, an old house can quickly lose its allure. Last year Alison Koop, a public relations manager for the University of Washington, came dangerously close to saying "I do" to a seemingly fabulous mid-century home in northeastern Seattle. Ms. Koop was so smitten with the big windows and vaulted ceilings in the living room that she neglected to notice the exposed wires, shoddy roof and other structural problems. Any delusions Ms. Koop had were laid to rest in the guest bathroom. "When the inspector turned the faucet on," she says, "the spigot fell off, hitting the floor of the tub with an exclamatory thunk."
If you're considering an old home, don't let the inspection be your last line of defense, says Jay Papasan, vice president of publishing at Keller Williams Realty. "Negotiate a long due diligence period," he says. That gives you time to get real estimates from contractors and back out if need be.
Of course, new homes aren't without their drawbacks. Recently, many newly built homes experienced serious problems with Chinese-made drywall, for example. Proceed with care whatever the home's age.
4. FOCUSING ON THE HOUSE, NOT THE NEIGHBORHOOD
In hindsight, many buyers say they wish they'd taken their due diligence a few steps further to really get to know all the perks, quirks and hassles of living in a particular place. You can always fix up the house, but there's no easy remedy for annoying neighbors, oppressive homeowner association rules and marathon commutes. When Laurie Tarkan and her husband bought their first home in 2001 they were so infatuated with the circa-1924 three-bedroom cottage that–in addition to brushing over some of the headaches of an old house –they didn't give a whole lot of thought to its somewhat out-of-the-way location about a mile from downtown Maplewood, N.J., a popular New York suburb. "As a first-time buyer you're not aware of all the things you should think about that aren't about the house," says Ms. Tarkan, who after living in New York City for 17 years, still hasn't gotten used to driving everywhere.
Spend as much time as you can in your future neighborhood, ideally on different days and times. Eat in the restaurants, drop in a yoga class, test drive your commute.
5. MAKING ARBITRARY OFFERS
With housing inventory running high and sales at record lows, in most markets, there's no shortage of houses for sale and sellers desperate to get out from under them–all the more reason to hold out for the right house and the right price. But when you find that perfect house, don't assume you can lob a lowball offer or make unreasonable demands. Even in hard-hit markets, nice houses in desirable neighborhoods are fetching multiple bids.
If the house has been on the market for months, you probably don't need to worry about other buyers lining up behind you. Make an offer based on recent sales for comparable homes, foreclosure activity and market trends, and don't be afraid to start the bidding low. If the house is fresh on the market (or recently foreclosed) and other buyers are circling the block, put your best foot forward but don't get suckered into a bidding war.
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Article written by Sarah Max - Wall Street Journal - Real Estate
Wednesday, September 8, 2010
FHA PPROGRAM FOR UNDERWATER BORROWERS NOW UNDERWAY
Tuesday marked the start of a new, targeted government housing program designed to help the millions of Americans who, in the wake of plummeting property values, owe more on the mortgage than their home is worth.
The government’s mortgage insurer, the Federal Housing Administration, is at the center of the new program for underwater homeowners. FHA is now offering certain non-FHA borrowers with negative equity, who are current on their existing mortgage, the opportunity to refinance into a new FHA-insured loan, as long as their existing lien holders agree to write off at least 10 percent of the unpaid principal balance on the first mortgage.
Officials have suggested that between 500,000 and 1.5 million underwater borrowers could receive a new, more sustainable mortgage through the FHA Short Refinance oprion.
But analysts say because participation in the program is voluntary and requires the consent of all lien holders, they expect significantly smaller results. Barclays Capital estimates that the new FHA refinancing program will only reach 200,000 to 300,000 homeowners.
The latest data from CoreLogic shows that some 11 million borrowers were in a negative equity position as of the end of June. That equates to 23 percent of all U.S. residential properties with a mortgage.
The FHA Short Refinance option, originally announced in March, is aimed at providing some mortgage relief to homeowners whose biggest investment – their home – has left them with a huge equity gap because their local markets saw declines in home values.
Homeowner advocates and even government watchdog groups have been imploring the administration to tackle the underwater mortgage issue for some time now. Studies have shown that severe negative equity can be a strong default trigger. By getting in front of the problem early with a solution, while these homeowners are still current, the administration is hoping to fend off a new round of foreclosures.
To facilitate the refinancing of new FHA-insured loans under the program, the U.S. Department of Treasury says it will provide incentives to existing second lien holders who agree to full or partial extinguishment of the liens.
The government has earmarked $14 billion in Troubled Asset Relief Program (TARP) funds to support the program.
-----------------------------------
Article written by Carrie Bay - http://www.dsnews.com/
The government’s mortgage insurer, the Federal Housing Administration, is at the center of the new program for underwater homeowners. FHA is now offering certain non-FHA borrowers with negative equity, who are current on their existing mortgage, the opportunity to refinance into a new FHA-insured loan, as long as their existing lien holders agree to write off at least 10 percent of the unpaid principal balance on the first mortgage.
Officials have suggested that between 500,000 and 1.5 million underwater borrowers could receive a new, more sustainable mortgage through the FHA Short Refinance oprion.
But analysts say because participation in the program is voluntary and requires the consent of all lien holders, they expect significantly smaller results. Barclays Capital estimates that the new FHA refinancing program will only reach 200,000 to 300,000 homeowners.
The latest data from CoreLogic shows that some 11 million borrowers were in a negative equity position as of the end of June. That equates to 23 percent of all U.S. residential properties with a mortgage.
The FHA Short Refinance option, originally announced in March, is aimed at providing some mortgage relief to homeowners whose biggest investment – their home – has left them with a huge equity gap because their local markets saw declines in home values.
Homeowner advocates and even government watchdog groups have been imploring the administration to tackle the underwater mortgage issue for some time now. Studies have shown that severe negative equity can be a strong default trigger. By getting in front of the problem early with a solution, while these homeowners are still current, the administration is hoping to fend off a new round of foreclosures.
To facilitate the refinancing of new FHA-insured loans under the program, the U.S. Department of Treasury says it will provide incentives to existing second lien holders who agree to full or partial extinguishment of the liens.
The government has earmarked $14 billion in Troubled Asset Relief Program (TARP) funds to support the program.
-----------------------------------
Article written by Carrie Bay - http://www.dsnews.com/
Friday, September 3, 2010
NAR's INDEX OF PENDING HOME SALES UNEXPECTEDLY CLIMBS
Following a sharp drop in the months immediately after the homebuyer tax credit expired, the National Association of Realtors’ (NAR) gauge for future sales of previously owned homes has risen.
NAR reported Thursday that its Pending Home Sales Index, a forward-looking indicator based on contracts signed in July, increased 5.2 percent from last month’s reading. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.
The index remains 19 percent below measurements recorded a year ago, but the month-to-month jump was an unexpected development, and some analysts are saying it may be a sign that the post-tax credit lull in home sales will soon come to an end. A group of economists surveyed by Bloomberg were expecting the pending sales index to fall by 1 percent.
The national index had fallen 29.9 percent based on contract signings in May – closely reflected in July’s 27 percent drop in actual existing-home sales. It lost another 2.8 percent after NAR’s analysis of June’s contracts, likely a good indicator of where August’s actual sales will end up. The latest 5.2 percent increase could be a telling sign of September’s sales numbers.
Despite the bit of good news his organization offered the markets with its Thursday report, Lawrence Yun, NAR’s chief economist, cautioned that the recovery ahead will be a slow and lengthy one.
“Home sales will remain soft in the months ahead, but improved affordability conditions should help with a recovery,” Yun said. “But the recovery looks to be a long process. Homebuyers over the past year got a great deal [but] for those who bought at or near the peak several years ago, particularly in markets experiencing big bubbles, it may take over a decade to fully recover lost equity.”
Pending home sales are currently up in every region of the country. The Northeast saw an increase of 6.3 percent; the Midwest’s index rose 4.1 percent; the South posted a 1.2 percent gain; and the West was the big leader, with an 11.6 percent increase.
Paul Dales, U.S. economist for the research firm Capital Economics, says though, that the key point is that economic conditions are not strong enough to generate a decent housing recovery.
“Processing delays mean that the relationship between pending home sales and actual existing home sales has loosened in recent months,” Dales said. “But at face value, the former is now consistent with a rise in existing sales from July’s record low of 3.83m to around 4.40m in August.”
Dales added, “That would be a spectacular-sounding 15 percent month-to-month jump, but it would not even reverse the falls seen after the expiry of the tax credit and would leave sales at levels not sustained since 1997.”
------------------------------
Article written by Carrie Bay - http://www.dsnews.com/
NAR reported Thursday that its Pending Home Sales Index, a forward-looking indicator based on contracts signed in July, increased 5.2 percent from last month’s reading. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.
The index remains 19 percent below measurements recorded a year ago, but the month-to-month jump was an unexpected development, and some analysts are saying it may be a sign that the post-tax credit lull in home sales will soon come to an end. A group of economists surveyed by Bloomberg were expecting the pending sales index to fall by 1 percent.
The national index had fallen 29.9 percent based on contract signings in May – closely reflected in July’s 27 percent drop in actual existing-home sales. It lost another 2.8 percent after NAR’s analysis of June’s contracts, likely a good indicator of where August’s actual sales will end up. The latest 5.2 percent increase could be a telling sign of September’s sales numbers.
Despite the bit of good news his organization offered the markets with its Thursday report, Lawrence Yun, NAR’s chief economist, cautioned that the recovery ahead will be a slow and lengthy one.
“Home sales will remain soft in the months ahead, but improved affordability conditions should help with a recovery,” Yun said. “But the recovery looks to be a long process. Homebuyers over the past year got a great deal [but] for those who bought at or near the peak several years ago, particularly in markets experiencing big bubbles, it may take over a decade to fully recover lost equity.”
Pending home sales are currently up in every region of the country. The Northeast saw an increase of 6.3 percent; the Midwest’s index rose 4.1 percent; the South posted a 1.2 percent gain; and the West was the big leader, with an 11.6 percent increase.
Paul Dales, U.S. economist for the research firm Capital Economics, says though, that the key point is that economic conditions are not strong enough to generate a decent housing recovery.
“Processing delays mean that the relationship between pending home sales and actual existing home sales has loosened in recent months,” Dales said. “But at face value, the former is now consistent with a rise in existing sales from July’s record low of 3.83m to around 4.40m in August.”
Dales added, “That would be a spectacular-sounding 15 percent month-to-month jump, but it would not even reverse the falls seen after the expiry of the tax credit and would leave sales at levels not sustained since 1997.”
------------------------------
Article written by Carrie Bay - http://www.dsnews.com/
Wednesday, August 25, 2010
THE TOP FIVE CONTRACTOR SCAMS AND HOW TO AVOID THEM
Protect yourself against unscrupulous contractors by learning about the warning signs of these common home-improvement scams.
Crooks go where the money is. So with Americans spending as much as $22 billion a year on construction projects, it’s no surprise that home improvement has become a favorite target for fraud artists. Some of these shady characters use amazingly well-polished hoaxes that are tricky to spot until it’s too late.
The vast majority of contractors are honest, hardworking professionals. Protecting yourself against the few bad apples requires checking references, having a solid contract, and being alert to the warning signs of these top five contractor scams.
SCAM 1: I NEED THE MONEY UPFRONT
This is the most common ruse reported to the Better Business Bureau, says Erin Dufner, vice president of the organization’s Austin, Texas, office. Your contractor explains that because he has to order materials and rent earthmoving equipment to get the job started, he needs, say, 30% to 50% of the project price up front. Once you’ve forked over the dough, one of two things happens: He disappears on you, or he starts doing slapdash work knowing that you can’t really fire him because he’s sitting on thousands of your dollars.
How to protect yourself: Never prepay more than $1,000 or 10% of the job total, whichever is less. That’s the legal maximum in some states, and enough to establish that you’re a serious customer so the contractor can work you into his schedule—the only valid purpose of an advance payment. As to the materials and backhoe rentals, if he’s a professional in good standing, his suppliers will provide them on credit.
SCAM 2: TAKE MY WORD FOR IT
When you first meet with the contractor, he’s very agreeable about doing everything exactly to your specifications and even suggests his own extra touches and upgrades. Some of the details don’t make it into the contract, but you figure it doesn’t matter because you had such a clear verbal understanding. Pretty soon, though, you notice that the extras you’d discussed aren’t being built. When you confront the contractor, he tells you that he didn’t include those features in his price, so you’ll have to live without them or pony up additional money to redo the work.
How to protect yourself: Unfortunately, you have no legal recourse because you signed a contract that didn’t include all the details. Next time, make sure everything you’ve agreed on is written into the project description. Add any items that are missing, put your initials next to each addition, and have the contractor initial it, too—all before you sign.
SCAM 3: I DON'T NEED TO GET A PERMIT
You’re legally required to get a building permit for any significant construction project. That allows building officials to visit the site periodically to confirm that the work meets safety codes. On small interior jobs, an unlicensed contractor may try to skirt the rule by telling you that authorities won’t notice. On large jobs that can’t be hidden, the contractor may try another strategy and ask you to apply for a homeowner’s permit, an option available to do-it-yourselfers.
But taking out your own permit for a contractor job means lying to authorities about who’s doing the work. And it makes you responsible for monitoring all the inspections, explaining to the contractor what changes the inspector wants, and getting him to make them—since the contractor doesn’t answer to the inspector, you do.
How to protect yourself: Always demand that the contractor get a building permit. Yes, it informs the local tax assessor about your upgrade, but it weeds out unlicensed contractors and gives you the added protection of an independent assessment of the work, says Tampa, Florida, attorney George Meyer, chair-elect of the American Bar Association’s Forum on the Construction Industry.
SCAM 4: WE RAN INTO UNFORSEEN PROBLEMS
The job is already under way, perhaps even complete, when this one hits. Suddenly your contractor informs you that the agreed-upon price has skyrocketed. He blames the discovery of structural problems, like a missing beam or termite damage, or design changes that you made after the job began.
The additional fees might very well be legit, but some unscrupulous contractors bid jobs low to get the work and then find excuses to jack up the price later. If you’re unsure whether your contractor is telling the truth about structural problems, you can get an impartial opinion from a home inspector, the local branch of the National Association of Home Builders, or even your local building department.
How to protect yourself: Before signing the contract, make sure it includes a procedure for change orders, which are mini-contracts containing a work description and a fixed price, for anything that gets added to the job in progress. The extra work, whether it’s related to unforeseen building issues or homeowner whims, can proceed only after the change order is signed by both homeowner and contractor.
SCAM 5: I HAVE EXTRA MATERIALS I CAN SELL YOU CHEAP
This hoax is usually run by driveway paving companies, whose materials—hot-top asphalt and concrete—can’t be returned to the supplier. So the crew pulls up to your house with a load of leftover product and quotes a great price to resurface your driveway on the spot. Even assuming they really are giving you a bargain (by no means a sure thing), taking them up on the offer is risky. You have no idea who they are or whether they’ll do the job right. And if the driveway starts cracking next year, you can be sure that you won’t be able to find this bunch again.
How to protect yourself: Never hire a contractor on the spot, whether it’s a driveway paver, an emergency repairman who shows up after a major storm, or a landscaper with surplus plantings. Take your time to check contractors out to make sure they have a good reputation and do quality work.
All of these situations can be difficult to resolve once you’re a victim. But a little up-front effort now can keep you from throwing good money after bad later on.
--------------------------------
Article written by Oliver Marks - HouseLogic.com
A former carpenter and newspaper reporter, Oliver Marks has been writing about home improvements for 16 years. He’s currently restoring his second fixer-upper with a mix of big hired projects and small do-it-himself jobs.
Crooks go where the money is. So with Americans spending as much as $22 billion a year on construction projects, it’s no surprise that home improvement has become a favorite target for fraud artists. Some of these shady characters use amazingly well-polished hoaxes that are tricky to spot until it’s too late.
The vast majority of contractors are honest, hardworking professionals. Protecting yourself against the few bad apples requires checking references, having a solid contract, and being alert to the warning signs of these top five contractor scams.
SCAM 1: I NEED THE MONEY UPFRONT
This is the most common ruse reported to the Better Business Bureau, says Erin Dufner, vice president of the organization’s Austin, Texas, office. Your contractor explains that because he has to order materials and rent earthmoving equipment to get the job started, he needs, say, 30% to 50% of the project price up front. Once you’ve forked over the dough, one of two things happens: He disappears on you, or he starts doing slapdash work knowing that you can’t really fire him because he’s sitting on thousands of your dollars.
How to protect yourself: Never prepay more than $1,000 or 10% of the job total, whichever is less. That’s the legal maximum in some states, and enough to establish that you’re a serious customer so the contractor can work you into his schedule—the only valid purpose of an advance payment. As to the materials and backhoe rentals, if he’s a professional in good standing, his suppliers will provide them on credit.
SCAM 2: TAKE MY WORD FOR IT
When you first meet with the contractor, he’s very agreeable about doing everything exactly to your specifications and even suggests his own extra touches and upgrades. Some of the details don’t make it into the contract, but you figure it doesn’t matter because you had such a clear verbal understanding. Pretty soon, though, you notice that the extras you’d discussed aren’t being built. When you confront the contractor, he tells you that he didn’t include those features in his price, so you’ll have to live without them or pony up additional money to redo the work.
How to protect yourself: Unfortunately, you have no legal recourse because you signed a contract that didn’t include all the details. Next time, make sure everything you’ve agreed on is written into the project description. Add any items that are missing, put your initials next to each addition, and have the contractor initial it, too—all before you sign.
SCAM 3: I DON'T NEED TO GET A PERMIT
You’re legally required to get a building permit for any significant construction project. That allows building officials to visit the site periodically to confirm that the work meets safety codes. On small interior jobs, an unlicensed contractor may try to skirt the rule by telling you that authorities won’t notice. On large jobs that can’t be hidden, the contractor may try another strategy and ask you to apply for a homeowner’s permit, an option available to do-it-yourselfers.
But taking out your own permit for a contractor job means lying to authorities about who’s doing the work. And it makes you responsible for monitoring all the inspections, explaining to the contractor what changes the inspector wants, and getting him to make them—since the contractor doesn’t answer to the inspector, you do.
How to protect yourself: Always demand that the contractor get a building permit. Yes, it informs the local tax assessor about your upgrade, but it weeds out unlicensed contractors and gives you the added protection of an independent assessment of the work, says Tampa, Florida, attorney George Meyer, chair-elect of the American Bar Association’s Forum on the Construction Industry.
SCAM 4: WE RAN INTO UNFORSEEN PROBLEMS
The job is already under way, perhaps even complete, when this one hits. Suddenly your contractor informs you that the agreed-upon price has skyrocketed. He blames the discovery of structural problems, like a missing beam or termite damage, or design changes that you made after the job began.
The additional fees might very well be legit, but some unscrupulous contractors bid jobs low to get the work and then find excuses to jack up the price later. If you’re unsure whether your contractor is telling the truth about structural problems, you can get an impartial opinion from a home inspector, the local branch of the National Association of Home Builders, or even your local building department.
How to protect yourself: Before signing the contract, make sure it includes a procedure for change orders, which are mini-contracts containing a work description and a fixed price, for anything that gets added to the job in progress. The extra work, whether it’s related to unforeseen building issues or homeowner whims, can proceed only after the change order is signed by both homeowner and contractor.
SCAM 5: I HAVE EXTRA MATERIALS I CAN SELL YOU CHEAP
This hoax is usually run by driveway paving companies, whose materials—hot-top asphalt and concrete—can’t be returned to the supplier. So the crew pulls up to your house with a load of leftover product and quotes a great price to resurface your driveway on the spot. Even assuming they really are giving you a bargain (by no means a sure thing), taking them up on the offer is risky. You have no idea who they are or whether they’ll do the job right. And if the driveway starts cracking next year, you can be sure that you won’t be able to find this bunch again.
How to protect yourself: Never hire a contractor on the spot, whether it’s a driveway paver, an emergency repairman who shows up after a major storm, or a landscaper with surplus plantings. Take your time to check contractors out to make sure they have a good reputation and do quality work.
All of these situations can be difficult to resolve once you’re a victim. But a little up-front effort now can keep you from throwing good money after bad later on.
--------------------------------
Article written by Oliver Marks - HouseLogic.com
A former carpenter and newspaper reporter, Oliver Marks has been writing about home improvements for 16 years. He’s currently restoring his second fixer-upper with a mix of big hired projects and small do-it-himself jobs.
Tuesday, August 24, 2010
HOME SALES PLUNGE 27 PERCENT TO LOWEST IN 15 YEARS
WASHINGTON -- Sales of previously occupied homes plunged last month to the lowest level in 15 years, despite the lowest mortgage rates in decades and bargain prices in many areas.
July's sales fell by more than 27 percent to a seasonally adjusted annual rate of 3.83 million, the National Association of Realtors said Tuesday. It was the largest monthly drop on records dating back to 1968, and sharp declines were recorded in all regions of the country.
Sales were particularly weak among homes priced in the lower to middle ranges. For example, in the Midwest, homes priced between $100,000 and $250,000 tumbled nearly 47 percent.
As sales have slowed, the inventory of unsold homes on the market grew to nearly 4 million in July. That's a 12.5 month supply at the current sales pace, the highest level in more than a decade. It compares with a healthy level of about six months.
One reason the market is hurting is that buyers and sellers are in a standoff over prices. Many sellers are reluctant to lower their prices. And buyers are hesitating because they think home prices haven't bottomed out.
"It really is a self-fulfilling prophecy," said Aaron Zapata, a real estate agent in Brea, Calif. "If all buyers perceive that home prices are coming down, then they will stop making offers - and home prices will come down."
The housing market is also being hampered by the weakening economic recovery. Unemployment remains stuck at 9.5 percent and many potential buyers worry they might not have a job to pay the mortgage.
Prices have fallen in part because foreclosures are running about 10 times higher than before the housing bust. Though the average rate for a 30-year fixed mortgage has sunk to 4.42 percent, many people can't qualify because banks have tightened their lending standards.
Home sales picked up in the spring when the government was offering tax credits. But the tax credits expired on April 30 and the market has been hobbled since.
The drop in July's sales was led by 35 percent plunge in the Midwest. Sales were down 30 percent in the Northeast, 25 percent in the West and 23 percent in the South.
The median sale price was $182,600, up 0.7 percent from a year ago, but down 0.2 percent from June.
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This article was written by Alan Zibel - Associated press
July's sales fell by more than 27 percent to a seasonally adjusted annual rate of 3.83 million, the National Association of Realtors said Tuesday. It was the largest monthly drop on records dating back to 1968, and sharp declines were recorded in all regions of the country.
Sales were particularly weak among homes priced in the lower to middle ranges. For example, in the Midwest, homes priced between $100,000 and $250,000 tumbled nearly 47 percent.
As sales have slowed, the inventory of unsold homes on the market grew to nearly 4 million in July. That's a 12.5 month supply at the current sales pace, the highest level in more than a decade. It compares with a healthy level of about six months.
One reason the market is hurting is that buyers and sellers are in a standoff over prices. Many sellers are reluctant to lower their prices. And buyers are hesitating because they think home prices haven't bottomed out.
"It really is a self-fulfilling prophecy," said Aaron Zapata, a real estate agent in Brea, Calif. "If all buyers perceive that home prices are coming down, then they will stop making offers - and home prices will come down."
The housing market is also being hampered by the weakening economic recovery. Unemployment remains stuck at 9.5 percent and many potential buyers worry they might not have a job to pay the mortgage.
Prices have fallen in part because foreclosures are running about 10 times higher than before the housing bust. Though the average rate for a 30-year fixed mortgage has sunk to 4.42 percent, many people can't qualify because banks have tightened their lending standards.
Home sales picked up in the spring when the government was offering tax credits. But the tax credits expired on April 30 and the market has been hobbled since.
The drop in July's sales was led by 35 percent plunge in the Midwest. Sales were down 30 percent in the Northeast, 25 percent in the West and 23 percent in the South.
The median sale price was $182,600, up 0.7 percent from a year ago, but down 0.2 percent from June.
-------------
This article was written by Alan Zibel - Associated press
HOUSING MARKET CONTINUES TO SEE FIRST TIME HOME BUYER EXODUS
First-time homebuyers continued to desert the housing market in July, according to a new industry study released Monday.
Data compiled by Campbell Surveys and Inside Mortgage Finance, shows that first-time homebuyers accounted for only 39.1 percent of the home purchase market last month. That’s down from a peak of 48.2 percent as recently as March and the lowest level seen in at least a year.
“The end of the tax credit has clearly had an effect,” said Thomas Popik, research director for Campbell Surveys. “First-time homebuyer participation is continuing to drop.”
Popik’s research team says the share of first-time homebuyer activity could fall to as low as 30-35 percent of the market by the fall months.
With homeowners continuing to fall behind on their mortgages, and more distressed properties coming onto the market, Popik says first-time homebuyers serve the function of soaking up this excess inventory.
In contrast, purchases by current homeowners have little positive effect on the housing inventory, because they usually sell a house at the same time they are buying another.
Short sales remain one of the few bright spots in the residential housing market. Time-on-market for short sales continued to decline, from an average of 20.5 weeks in February to 15.8 weeks in July, according to Campbell Surveys. First-time homebuyers made up a healthy 46.4 percent of short sale purchasers last month.
Campbell polls more than 3,000 real estate agents nationwide each month to evaluate trends in home sales and mortgage usage patterns.
The company says while fewer first-time homebuyers in the housing market will likely put downward pressure on home prices in the late summer and fall, in the near-term, real estate agents are reporting stable prices overall for the month of July and rising prices for non-distressed properties.
One real estate agent in Florida predicted, “Non-distressed property pricing is rising too quickly. Anticipated REOs coming on the market will impact this pricing by the end of September.”
Another agent in Iowa commented, “Once the ‘free’ money [from the federal tax credit] was over, the market began to die. The sales that would have normally taken place over the summer took place in March and April to get the money. The residential market is dying-prices are gradually falling.”
---------------------
This article was written by Carrie Bay - http://www.dsnews.com/
Data compiled by Campbell Surveys and Inside Mortgage Finance, shows that first-time homebuyers accounted for only 39.1 percent of the home purchase market last month. That’s down from a peak of 48.2 percent as recently as March and the lowest level seen in at least a year.
“The end of the tax credit has clearly had an effect,” said Thomas Popik, research director for Campbell Surveys. “First-time homebuyer participation is continuing to drop.”
Popik’s research team says the share of first-time homebuyer activity could fall to as low as 30-35 percent of the market by the fall months.
With homeowners continuing to fall behind on their mortgages, and more distressed properties coming onto the market, Popik says first-time homebuyers serve the function of soaking up this excess inventory.
In contrast, purchases by current homeowners have little positive effect on the housing inventory, because they usually sell a house at the same time they are buying another.
Short sales remain one of the few bright spots in the residential housing market. Time-on-market for short sales continued to decline, from an average of 20.5 weeks in February to 15.8 weeks in July, according to Campbell Surveys. First-time homebuyers made up a healthy 46.4 percent of short sale purchasers last month.
Campbell polls more than 3,000 real estate agents nationwide each month to evaluate trends in home sales and mortgage usage patterns.
The company says while fewer first-time homebuyers in the housing market will likely put downward pressure on home prices in the late summer and fall, in the near-term, real estate agents are reporting stable prices overall for the month of July and rising prices for non-distressed properties.
One real estate agent in Florida predicted, “Non-distressed property pricing is rising too quickly. Anticipated REOs coming on the market will impact this pricing by the end of September.”
Another agent in Iowa commented, “Once the ‘free’ money [from the federal tax credit] was over, the market began to die. The sales that would have normally taken place over the summer took place in March and April to get the money. The residential market is dying-prices are gradually falling.”
---------------------
This article was written by Carrie Bay - http://www.dsnews.com/
Monday, August 23, 2010
LET THE AMERICAN HOUSING MARKET NORMALIZE
Recently there have been some encouraging signs that Congress is finally willing to admit what should have been evident two years ago. Even after a $150 billion bailout, Fannie Mae and Freddie Mac are still bankrupt and should be abolished. Indeed Rep. Barney Frank, a longtime champion of Fannie and Freddie has made a few statements alluding to this and I have signed on to a letter asking him to clarify his remarks and hold hearings on this topic. There seems to be a growing consensus in favor of abolishing Fannie and Freddie. This is the good news.
The bad news is that instead of simply returning to the free market, Fannie and Freddie will probably be replaced with something equally damaging, and at this point we can only guess what that will be. One possibility is that instead of these two giant Government Sponsored Enterprises (GSEs) the government will deputize thousands of smaller banks to do the same thing – that is to securitize mortgages with taxpayer guarantees to encourage lending that otherwise would not happen. In other words, there will be a myriad of smaller Fannies and Freddies, and government involvement will reach even deeper into the financial sector.
Fannie and Freddie, and thus the taxpayer, has an alarming $5 trillion exposure to the mortgage market. To some, spreading out this risk might seem tempting, and a smart thing to do. But the fact remains that if a bank expects to lose money on a loan, so will the taxpayers. Playing around with structures and definitions will still not deal with the root problem – government meddling in the housing market, playing fast and loose with our tax dollars, and central planning by the Federal Reserve.
Banks have complex risk assessment strategies in place that help them forecast if a particular loan will make them any money or not. If they expect to make money, they will approve the loan. If they have doubts, sometimes they will ask for a co-signer to improve their odds. You might do this willingly for a friend or a relative if you didn’t mind losing some money on their behalf, but current government policies essentially force taxpayers to become cosigners for risky borrowers that are complete strangers, who the banks have already determined to be bad risks. Taxpayers have no choice in the matter because politicians decided a few decades ago that dangling homeownership in front of more people seemed like a good way to garner votes.
That was sold to voters as a compassionate gesture to the poor and beneficial to society as a whole. After all, how could giving more Americans an ownership stake in society be bad? The combined policies of loose credit and government backing increased the demand for housing and drove prices sky high. When the housing market heated up to the breaking point everything came crashing down. Those suddenly facing foreclosure saw the reality of government compassion. Truly, when government offers you a gift, you should eye it with great suspicion.
Another tragedy is that many job seekers are now tethered to their locations because of upside down loan obligations. It takes a lot of effort with their bank and damage to their credit scores to figure out how to get out and move to a place where there are jobs. Will the government now be seeking ways to subsidize renters in some way because of this lack of mobility? Some think so.
My hope is that for the long term stability and health of the economy, the government will extricate itself from the market altogether and let it normalize. My fear is that in its usual misguided efforts at solving one crisis, it will create a thousand others.
-----------
Article written by Mr. Ron Paul - Congressman from Texas
The bad news is that instead of simply returning to the free market, Fannie and Freddie will probably be replaced with something equally damaging, and at this point we can only guess what that will be. One possibility is that instead of these two giant Government Sponsored Enterprises (GSEs) the government will deputize thousands of smaller banks to do the same thing – that is to securitize mortgages with taxpayer guarantees to encourage lending that otherwise would not happen. In other words, there will be a myriad of smaller Fannies and Freddies, and government involvement will reach even deeper into the financial sector.
Fannie and Freddie, and thus the taxpayer, has an alarming $5 trillion exposure to the mortgage market. To some, spreading out this risk might seem tempting, and a smart thing to do. But the fact remains that if a bank expects to lose money on a loan, so will the taxpayers. Playing around with structures and definitions will still not deal with the root problem – government meddling in the housing market, playing fast and loose with our tax dollars, and central planning by the Federal Reserve.
Banks have complex risk assessment strategies in place that help them forecast if a particular loan will make them any money or not. If they expect to make money, they will approve the loan. If they have doubts, sometimes they will ask for a co-signer to improve their odds. You might do this willingly for a friend or a relative if you didn’t mind losing some money on their behalf, but current government policies essentially force taxpayers to become cosigners for risky borrowers that are complete strangers, who the banks have already determined to be bad risks. Taxpayers have no choice in the matter because politicians decided a few decades ago that dangling homeownership in front of more people seemed like a good way to garner votes.
That was sold to voters as a compassionate gesture to the poor and beneficial to society as a whole. After all, how could giving more Americans an ownership stake in society be bad? The combined policies of loose credit and government backing increased the demand for housing and drove prices sky high. When the housing market heated up to the breaking point everything came crashing down. Those suddenly facing foreclosure saw the reality of government compassion. Truly, when government offers you a gift, you should eye it with great suspicion.
Another tragedy is that many job seekers are now tethered to their locations because of upside down loan obligations. It takes a lot of effort with their bank and damage to their credit scores to figure out how to get out and move to a place where there are jobs. Will the government now be seeking ways to subsidize renters in some way because of this lack of mobility? Some think so.
My hope is that for the long term stability and health of the economy, the government will extricate itself from the market altogether and let it normalize. My fear is that in its usual misguided efforts at solving one crisis, it will create a thousand others.
-----------
Article written by Mr. Ron Paul - Congressman from Texas
NY BANKING DEPARTMENT ISSUES NEW REGULATIONS FOR MORTGAGE SERVICERS
In its efforts to protect homeowners and avoid another mortgage and foreclosure crisis, the New York State Banking Department has issued new rules regarding the business practices of mortgage loan servicers.
The regulations, which go into effect October 1, implement provisions from 2008’s Mortgage Lending Reform Law to create consumer protections for subprime and high-cost home loans.
Servicers handling New York-based mortgages must abide by these new regulations, which include a duty to avoid preventable foreclosures by pursuing loss mitigation efforts. In addition, if a homeowner is being considered for, or is currently in, a trial or permanent modification, servicers are expected to avoid foreclosure actions.
Daily interactions between servicers and borrowers are also regulated, and lenders are prohibited from employing “unfair or deceptive business practices.”
“New York State is continuing to take important steps toward ensuring that we will not see another mortgage and foreclosure crisis spurred on by irresponsible lenders or by unscrupulous individuals taking advantage of cracks in the system,” said Richard H. Neiman, the state’s superintendent of banks.
Neiman added, “With these business conduct rules for mortgage servicers combined with our existing oversight of mortgage bankers, brokers, and loan originators, we are covering a mortgage throughout its life. From the moment a mortgage is signed in New York State to the time it comes to its end, these loans must now be handled at every step of the process by individuals and companies that are accountable to homeowners.”
Somewhat analogous to servicer guidelines provided by the Home Affordable Modification Program (HAMP), New York’s newly issued requirements are enforceable as law by state and federal regulators.
“We would like for the regulation of mortgage servicers in New York State to serve, not only as a model for other states, but also as a model for national minimum standards that can be enforced across the country,” said Neiman. “Just as we saw with the SAFE Act and the licensing of mortgage loan originators, states can and should serve as examples for lawmaking at the federal level.”
Servicers are also required to have a sufficient staff on hand, written procedures for consumer inquiries and complaints, and methods for ensuring that homeowners do not have to submit multiple copies of required documents.
-----------------------
Article written by Heather Hill Cernoch - http://www.dsnews.com/
The regulations, which go into effect October 1, implement provisions from 2008’s Mortgage Lending Reform Law to create consumer protections for subprime and high-cost home loans.
Servicers handling New York-based mortgages must abide by these new regulations, which include a duty to avoid preventable foreclosures by pursuing loss mitigation efforts. In addition, if a homeowner is being considered for, or is currently in, a trial or permanent modification, servicers are expected to avoid foreclosure actions.
Daily interactions between servicers and borrowers are also regulated, and lenders are prohibited from employing “unfair or deceptive business practices.”
“New York State is continuing to take important steps toward ensuring that we will not see another mortgage and foreclosure crisis spurred on by irresponsible lenders or by unscrupulous individuals taking advantage of cracks in the system,” said Richard H. Neiman, the state’s superintendent of banks.
Neiman added, “With these business conduct rules for mortgage servicers combined with our existing oversight of mortgage bankers, brokers, and loan originators, we are covering a mortgage throughout its life. From the moment a mortgage is signed in New York State to the time it comes to its end, these loans must now be handled at every step of the process by individuals and companies that are accountable to homeowners.”
Somewhat analogous to servicer guidelines provided by the Home Affordable Modification Program (HAMP), New York’s newly issued requirements are enforceable as law by state and federal regulators.
“We would like for the regulation of mortgage servicers in New York State to serve, not only as a model for other states, but also as a model for national minimum standards that can be enforced across the country,” said Neiman. “Just as we saw with the SAFE Act and the licensing of mortgage loan originators, states can and should serve as examples for lawmaking at the federal level.”
Servicers are also required to have a sufficient staff on hand, written procedures for consumer inquiries and complaints, and methods for ensuring that homeowners do not have to submit multiple copies of required documents.
-----------------------
Article written by Heather Hill Cernoch - http://www.dsnews.com/
Wednesday, August 18, 2010
SEVENTY TWO ACRE FARM IN COPAKE, NEW YORK
Hamptons of the mountains!! Bike on the Harlem Valley "Rail-Trail"."Bash-Bish Falls, "Catamount Ski Lodge," in 5 minutes . A 3 minute ride takes you to the Under-Utilized Taconic State Park with its "Ore Pit Lake" (lifeguards on duty all summer) and toddler wading pool.
Approximately 70 Acres of this property is currently farmed and benefit from an agricultural tax exemption.
The property taxes are under $8k yearly. This 10 year young cedar-clapboard home was built with great care (i.e.. Over-Sized Beams and Insulation, Marvin Windows) and is "Energy Efficient," with a state of the art 2-zone oil hot water central heating system. 3 large Bedrooms and 2-1/2 baths, Living Room with Energy Efficient Fireplace. The Dining Room has Sweeping View to Distant Mountains as does the porch and sun deck. New Kitchen with Island, Mud &
Laundry room. The full basement has high ceilings, Oil hot water heating system with a separate Hot Water heater, Heavy Duty Electric. 2-1/2 Car Attached garage.
SPECIAL FEATURES:
1. Detached Work Shop Building: 4x40, heated, water, sufficiently large to hold 4 large vehicles.
2. Green House: 24x30 with automatic propane heating & cooling system.
3. Tennis Court
For more information and/or pictures, CLICK HERE!
Tuesday, August 17, 2010
THE YEAR OF THE SHORT SALE: SEVEN TIPS TO FINDING YOUR NEW HOME AT DISCOUNT
Real estate professionals nationwide are calling 2010 “the year of the short sale,” where homeowners who owe more on their properties than what they are worth sell at deeply discounted prices—with the blessing of their lender.
Here is how to go about successfully buying a short sale:
1. Search for short sale properties
Most short sales are listed by real estate agents. You will find these listings on local websites and in MLS feeds. Some lenders have complained about advertising that identifies the home as a short sale, because the lenders feel it puts them at a disadvantage when it comes to home pricing. This is accurate, as buyers generally offer less when the property is advertised as a short sale.
Read the listing carefully. Agents slip in words that identify the listing as a short sale. Look for the following terms:
• Subject to bank approval
• Pre-foreclosure
• Notice of Default
• Give the bank time to respond
• Preapproved by bank
• Headed for auction
2. Select a real estate professional
Professionals with short sale experience can help you navigate the short sales process in your local market. The buying process is often far more complex—and far longer than typical sales–so a trained ally on your side can make your experience successful.
3. Investigate the mortgage and liens on the property
Here’s where a good short sale real estate agent is worth his or her weight in gold. Uncover how much the mortgage is worth. Find out how much the current owners paid and when. Find out how many liens are on the property. Find out which lender is the primary lien holder. Research comparable sales in the area.
4. Have a home inspection
Short sales are typically sold “as is,” with no contingencies allowed. That short sale is no bargain if you discover—after the closing—that it requires major, unexpected repairs. A thorough home inspection will provide a clear view of the home’s condition, allowing you to make educated decisions on whether or not to purchase.
5. Write a complete offer
Remember, the lender—not the owner selling the property—is calling the shots and decides whether your offer will be accepted, rejected or countered. Helping the lender, whose agents may be overloaded with a glut of short sales, fully understand the financial picture will support your bid. Include the following materials with any short sale offer:
• Cover letter
• Signed owner/borrower short sale purchase agreement
• Seller hardship letter
• Seller payroll stubs
• Two years of seller tax returns
• Market comparables
• HUD-1 closing net sheet
• Repair cost estimate
• Pictures of property
6. Negotiate
Like any real estate transaction, successful negotiation is required to strike a deal. If the lender rejects or counters your written offer, you’ll have to negotiate with the lender by making a higher offer. Be prepared to offer more money to close the deal, or to walk away if it doesn’t make financial sense.
7. Be Patient
Short sales, which have increased in volume and frequency, are overloading some lenders. Be aware that processing and decision-making times for some lenders can be quite long—up to a year or more. Decide if you have flexibility in your timing, and if so, know that you may be waiting for awhile.
----------------------------
Article written by Dan Steward, President of Pillar To Post Home Inspection.
For more information, visit http://www.pillartopost.com/.
Here is how to go about successfully buying a short sale:
1. Search for short sale properties
Most short sales are listed by real estate agents. You will find these listings on local websites and in MLS feeds. Some lenders have complained about advertising that identifies the home as a short sale, because the lenders feel it puts them at a disadvantage when it comes to home pricing. This is accurate, as buyers generally offer less when the property is advertised as a short sale.
Read the listing carefully. Agents slip in words that identify the listing as a short sale. Look for the following terms:
• Subject to bank approval
• Pre-foreclosure
• Notice of Default
• Give the bank time to respond
• Preapproved by bank
• Headed for auction
2. Select a real estate professional
Professionals with short sale experience can help you navigate the short sales process in your local market. The buying process is often far more complex—and far longer than typical sales–so a trained ally on your side can make your experience successful.
3. Investigate the mortgage and liens on the property
Here’s where a good short sale real estate agent is worth his or her weight in gold. Uncover how much the mortgage is worth. Find out how much the current owners paid and when. Find out how many liens are on the property. Find out which lender is the primary lien holder. Research comparable sales in the area.
4. Have a home inspection
Short sales are typically sold “as is,” with no contingencies allowed. That short sale is no bargain if you discover—after the closing—that it requires major, unexpected repairs. A thorough home inspection will provide a clear view of the home’s condition, allowing you to make educated decisions on whether or not to purchase.
5. Write a complete offer
Remember, the lender—not the owner selling the property—is calling the shots and decides whether your offer will be accepted, rejected or countered. Helping the lender, whose agents may be overloaded with a glut of short sales, fully understand the financial picture will support your bid. Include the following materials with any short sale offer:
• Cover letter
• Signed owner/borrower short sale purchase agreement
• Seller hardship letter
• Seller payroll stubs
• Two years of seller tax returns
• Market comparables
• HUD-1 closing net sheet
• Repair cost estimate
• Pictures of property
6. Negotiate
Like any real estate transaction, successful negotiation is required to strike a deal. If the lender rejects or counters your written offer, you’ll have to negotiate with the lender by making a higher offer. Be prepared to offer more money to close the deal, or to walk away if it doesn’t make financial sense.
7. Be Patient
Short sales, which have increased in volume and frequency, are overloading some lenders. Be aware that processing and decision-making times for some lenders can be quite long—up to a year or more. Decide if you have flexibility in your timing, and if so, know that you may be waiting for awhile.
----------------------------
Article written by Dan Steward, President of Pillar To Post Home Inspection.
For more information, visit http://www.pillartopost.com/.
Monday, August 16, 2010
EVALUATE YOUR HOUSE FOR BASEMENT FINISHING
Finishing your basement into a family room, game room, or spare bedroom is a financially sound decision. In addition to increasing the usable (and enjoyable) living space of your home, a finished basement pays back a high percentage of your investment at resale. According to Remodeling Magazine’s annual Cost vs. Value Report, a basement remodeling project returns more than 75% of its original cost.
The cost of finishing your basement into usable living space is about $100 per square foot—generally less expensive than building up or out from your existing footprint. That’s because the basic structure—your home’s foundation—is already in place. Placing occasional-use areas, such as a laundry room, a spare bedroom, or a home theater below grade means that square footage above can remain dedicated to daily uses.
Code Considerations
The first step is to determine if your existing basement meets building codes for habitable space. As defined by the International Residential Code (IRC), a basement living space must have a clear, floor-to-ceiling height of at least 7 feet (6 feet for bathrooms). There are some exceptions for the presence of exposed structural beams, girders, or mechanical system components along the ceiling, but only if they’re spaced at least 4 feet apart and extend no more than 6 inches from the ceiling. Note that local and regional building codes may vary—always check the specific codes in your area.
If your existing basement ceiling height doesn’t meet those specifications, you have two options: The first is to raise your house and build up the foundation around it to gain the ceiling height you need. The other is to lower the floor, which entails removing the existing concrete slab floor, excavating to the desired level, and pouring new concrete footings and a floor slab. Both options require professional and precise engineering, excavation, and structural work that will cost at least $20,000.
Emergency Egress
Assuming, though, that your existing basement meets the IRC definition of “full height,” your next code challenge is to accommodate egress. The IRC dictates that at least one of a habitable basement’s windows or doors to the outside must be large enough to serve as an emergency point of egress (or exit, as well as an emergency rescue access) in addition to the staircase to and from the home’s main level.
If you’re planning a basement retreat to include a bedroom (what code calls a “sleeping” room), that room and all other sleeping rooms also must have their own point of egress, in addition to the one required for a general “living” space, such as a rec room or home office.
Each egress opening must be at least 5.7 sq. ft. with the windowsill no more than 44 inches above the floor, among other requirements that allow safe passage to the outside in the case of an emergency.
If you have a walkout basement, egress shouldn’t be an issue. Otherwise, you’ll have to build an egress. Most basement walls are built using poured concrete or masonry blocks, which can be cut (although not as easily as wood-framed walls) to create openings for egress windows or doors.
A Proper Staircase
In addition, the IRC regulates the specifications of the staircase from your home’s main level to the basement. Requirements include a handrail and stairs with proper width, tread, and riser dimensions. Also, there must be at least 6 ft. 8 inches of headroom at every point along the staircase.
It may be that you simply need to add a handrail—perhaps with a balustrade if the staircase is open to the basement instead of encased in a wall structure. If the stairway isn’t wide enough (at least 36 inches) or the steps aren’t to code, you may have to rebuild them, an extra cost of about $2,000.
Make sure your contractor confirms or considers code compliance for ceiling height, egress, and the staircase in your project budget to avoid potential conflicts, delays, and additional costs.
Checking for Moisture Problems
Arguably the biggest problem with basements is moisture and water infiltration. If you have seen water or moisture on your basement walls or floor, or signs of efflorescence or mold as a result of long-term dampness, you’ll need to solve that problem before you go any further. In addition to damaging finishes and eroding your home’s structure, unchecked moisture and water may cause mold and mildew growth that can adversely affect your health.
Depending on the severity of the water infiltration, and your available budget for a basement retreat, you have several options for addressing moisture problems. The best solution is to determine and solve the root cause, which is usually hydrostatic pressure from water in the surrounding soil pushing moisture through the basement walls or floor.
In that case, it’s best to excavate around the perimeter of your home’s foundation and install a drainage system and waterproofing membrane to relieve hydrostatic pressure against the structure and effectively block water from getting through the walls—a professional job that can cost $5,000 or more.
If that’s too far out of your budget, and the moisture issue is relatively minor, you can cover all cracks and joints with a 100% acrylic elastomeric sealant and apply brush-on coatings to the inside poured concrete or masonry walls and floor surfaces, a DIY project that might cost about $1,700 for a full-size basement.
If there’s a potential for flooding in your basement, think twice about turning the space into a living area. Even a minor flood can ruin flooring and finishes, leading to expensive repairs.
Your best defense against minor flooding is a sump pump. A sump pump automatically engages in the event of a flood and is about a $1,400 investment with professional installation. Because sump pumps run on a dedicate electrical circuit from the service panel, you might also consider a battery-operated backup pump (around $300) to engage in the event of a power outage, such as during a severe storm.
Heating and Cooling your Remodeled Basement
Your next task is to extend or supplement your home’s heating, cooling, and ventilation systems to serve the below-grade spaces. Those systems also requires code compliance for occupant health and safety (such as adequate venting of furnace combustion gasses), though typically nothing out of the ordinary or restricted by most jurisdictions.
With your contractor, make sure that your existing HVAC system can adequately keep your additional living space comfortable and properly ventilated. Sizing a furnace and air conditioner is a calculation generally based on square footage per ton of capacity. However, contractors should consider the home’s insulation values and other high-performance building practices to “right-size” the equipment and balance its performance and cost.
If your existing HVAC setup is not up to the task, you may have to add a secondary system dedicated to your finished basement or replace your existing system with larger-capacity equipment. Installing a vented room air conditioner and heater may add a few thousand dollars to your budget, while a complete HVAC system upgrade can run $10,000 or more.
A usable basement will also need electricity for lighting and other fixtures or finishes, such as an entertainment system or small appliances. Most homes will have adequate capacity in their existing electrical service box for basic needs; if not, a subpanel may be required to bring power to your retreat at a cost of a few hundred dollars.
Adding a Bathroom
The last big (and also potentially expensive) consideration is whether to add a bathroom to your basement retreat. The main issue here is draining wastewater to the existing city sewer or on-site septic system, and venting sewer gasses directly to the outside—just as your other bathrooms do—in compliance with building codes. That’s why a bathroom alone might be a $10,000 line item in your basement retreat budget.
Wastewater drainage typically relies on gravity, so you have to make sure that the waste pipes from your basement bathroom sink, shower or tub, and toilet are designed with enough of a slope (or “fall”) to drain properly and effectively. Achieving proper fall will require the removal and rebuilding of a small section of the basement slab and excavation of the ground underneath. The process involves digging a trench for the drainage pipe to connect the new bathroom to your home’s existing drainage system.
For the toilet, you might also consider a pressure-assisted toilet. A toilet equipped with a pressure valve forces waste through the pipes, rather than relying only on gravity to do the job. Such a unit may allow you to avoid digging into the foundation—consult with a licensed plumber about the feasibility. Expect to pay $150-$800 for a pressurized toilet.
If possible, locate the toilet (and any water-using appliance, such as a clothes washer) against an outside wall. This location will reduce the costs required to drain away waste and vent sewer gasses. Vents typically are required to extend up the wall (either through the structure or along the outside) to a height of at least 8 feet and at least 4 feet from any operable windows.
Converting your basement into finished living area calls for a contractor familiar with the special requirements of basement remodeling. When looking for a contractor, be sure to find one who has experience as a basement remodeler.
------------------------------------
Article witten by Richard Binsacca - HouseLogic.com
Rich Binsacca has been writing about housing and home improvement since 1987. He’s the author of 12 books on various home-related topics, is currently a contributing editor for Builder and EcoHome magazines, and has written articles for such magazines as Remodeling, Home, and Architectural Record. He still has the plans and cost estimate for the addition of a finished basement to a previous house, which required digging out the crawl space to create a full-height room.
The cost of finishing your basement into usable living space is about $100 per square foot—generally less expensive than building up or out from your existing footprint. That’s because the basic structure—your home’s foundation—is already in place. Placing occasional-use areas, such as a laundry room, a spare bedroom, or a home theater below grade means that square footage above can remain dedicated to daily uses.
Code Considerations
The first step is to determine if your existing basement meets building codes for habitable space. As defined by the International Residential Code (IRC), a basement living space must have a clear, floor-to-ceiling height of at least 7 feet (6 feet for bathrooms). There are some exceptions for the presence of exposed structural beams, girders, or mechanical system components along the ceiling, but only if they’re spaced at least 4 feet apart and extend no more than 6 inches from the ceiling. Note that local and regional building codes may vary—always check the specific codes in your area.
If your existing basement ceiling height doesn’t meet those specifications, you have two options: The first is to raise your house and build up the foundation around it to gain the ceiling height you need. The other is to lower the floor, which entails removing the existing concrete slab floor, excavating to the desired level, and pouring new concrete footings and a floor slab. Both options require professional and precise engineering, excavation, and structural work that will cost at least $20,000.
Emergency Egress
Assuming, though, that your existing basement meets the IRC definition of “full height,” your next code challenge is to accommodate egress. The IRC dictates that at least one of a habitable basement’s windows or doors to the outside must be large enough to serve as an emergency point of egress (or exit, as well as an emergency rescue access) in addition to the staircase to and from the home’s main level.
If you’re planning a basement retreat to include a bedroom (what code calls a “sleeping” room), that room and all other sleeping rooms also must have their own point of egress, in addition to the one required for a general “living” space, such as a rec room or home office.
Each egress opening must be at least 5.7 sq. ft. with the windowsill no more than 44 inches above the floor, among other requirements that allow safe passage to the outside in the case of an emergency.
If you have a walkout basement, egress shouldn’t be an issue. Otherwise, you’ll have to build an egress. Most basement walls are built using poured concrete or masonry blocks, which can be cut (although not as easily as wood-framed walls) to create openings for egress windows or doors.
A Proper Staircase
In addition, the IRC regulates the specifications of the staircase from your home’s main level to the basement. Requirements include a handrail and stairs with proper width, tread, and riser dimensions. Also, there must be at least 6 ft. 8 inches of headroom at every point along the staircase.
It may be that you simply need to add a handrail—perhaps with a balustrade if the staircase is open to the basement instead of encased in a wall structure. If the stairway isn’t wide enough (at least 36 inches) or the steps aren’t to code, you may have to rebuild them, an extra cost of about $2,000.
Make sure your contractor confirms or considers code compliance for ceiling height, egress, and the staircase in your project budget to avoid potential conflicts, delays, and additional costs.
Checking for Moisture Problems
Arguably the biggest problem with basements is moisture and water infiltration. If you have seen water or moisture on your basement walls or floor, or signs of efflorescence or mold as a result of long-term dampness, you’ll need to solve that problem before you go any further. In addition to damaging finishes and eroding your home’s structure, unchecked moisture and water may cause mold and mildew growth that can adversely affect your health.
Depending on the severity of the water infiltration, and your available budget for a basement retreat, you have several options for addressing moisture problems. The best solution is to determine and solve the root cause, which is usually hydrostatic pressure from water in the surrounding soil pushing moisture through the basement walls or floor.
In that case, it’s best to excavate around the perimeter of your home’s foundation and install a drainage system and waterproofing membrane to relieve hydrostatic pressure against the structure and effectively block water from getting through the walls—a professional job that can cost $5,000 or more.
If that’s too far out of your budget, and the moisture issue is relatively minor, you can cover all cracks and joints with a 100% acrylic elastomeric sealant and apply brush-on coatings to the inside poured concrete or masonry walls and floor surfaces, a DIY project that might cost about $1,700 for a full-size basement.
If there’s a potential for flooding in your basement, think twice about turning the space into a living area. Even a minor flood can ruin flooring and finishes, leading to expensive repairs.
Your best defense against minor flooding is a sump pump. A sump pump automatically engages in the event of a flood and is about a $1,400 investment with professional installation. Because sump pumps run on a dedicate electrical circuit from the service panel, you might also consider a battery-operated backup pump (around $300) to engage in the event of a power outage, such as during a severe storm.
Heating and Cooling your Remodeled Basement
Your next task is to extend or supplement your home’s heating, cooling, and ventilation systems to serve the below-grade spaces. Those systems also requires code compliance for occupant health and safety (such as adequate venting of furnace combustion gasses), though typically nothing out of the ordinary or restricted by most jurisdictions.
With your contractor, make sure that your existing HVAC system can adequately keep your additional living space comfortable and properly ventilated. Sizing a furnace and air conditioner is a calculation generally based on square footage per ton of capacity. However, contractors should consider the home’s insulation values and other high-performance building practices to “right-size” the equipment and balance its performance and cost.
If your existing HVAC setup is not up to the task, you may have to add a secondary system dedicated to your finished basement or replace your existing system with larger-capacity equipment. Installing a vented room air conditioner and heater may add a few thousand dollars to your budget, while a complete HVAC system upgrade can run $10,000 or more.
A usable basement will also need electricity for lighting and other fixtures or finishes, such as an entertainment system or small appliances. Most homes will have adequate capacity in their existing electrical service box for basic needs; if not, a subpanel may be required to bring power to your retreat at a cost of a few hundred dollars.
Adding a Bathroom
The last big (and also potentially expensive) consideration is whether to add a bathroom to your basement retreat. The main issue here is draining wastewater to the existing city sewer or on-site septic system, and venting sewer gasses directly to the outside—just as your other bathrooms do—in compliance with building codes. That’s why a bathroom alone might be a $10,000 line item in your basement retreat budget.
Wastewater drainage typically relies on gravity, so you have to make sure that the waste pipes from your basement bathroom sink, shower or tub, and toilet are designed with enough of a slope (or “fall”) to drain properly and effectively. Achieving proper fall will require the removal and rebuilding of a small section of the basement slab and excavation of the ground underneath. The process involves digging a trench for the drainage pipe to connect the new bathroom to your home’s existing drainage system.
For the toilet, you might also consider a pressure-assisted toilet. A toilet equipped with a pressure valve forces waste through the pipes, rather than relying only on gravity to do the job. Such a unit may allow you to avoid digging into the foundation—consult with a licensed plumber about the feasibility. Expect to pay $150-$800 for a pressurized toilet.
If possible, locate the toilet (and any water-using appliance, such as a clothes washer) against an outside wall. This location will reduce the costs required to drain away waste and vent sewer gasses. Vents typically are required to extend up the wall (either through the structure or along the outside) to a height of at least 8 feet and at least 4 feet from any operable windows.
Converting your basement into finished living area calls for a contractor familiar with the special requirements of basement remodeling. When looking for a contractor, be sure to find one who has experience as a basement remodeler.
------------------------------------
Article witten by Richard Binsacca - HouseLogic.com
Rich Binsacca has been writing about housing and home improvement since 1987. He’s the author of 12 books on various home-related topics, is currently a contributing editor for Builder and EcoHome magazines, and has written articles for such magazines as Remodeling, Home, and Architectural Record. He still has the plans and cost estimate for the addition of a finished basement to a previous house, which required digging out the crawl space to create a full-height room.
Friday, August 13, 2010
TAX DEDUCTIONS FOR VACATION HOMES
Tax deductions for vacation homes vary greatly depending on how much you use the home and whether you rent it out. A vacation home offers a break from the daily grind, but it can also offer a break from taxes. The IRS allows most owners to lower taxable income by taking tax deductions for vacation homes. What’s deductible depends on a number of factors, especially how often you visit and whether you allow renters.
Don’t limit your notion of a vacation home to a beach cottage or a mountain cabin. Even RVs and boats can count, as long as there are sleeping, cooking, and bathroom facilities. Tax deductions for vacation homes are complex, so consult a tax adviser.
Is your vacation home a vacation home?
If you bought your vacation home exclusively for personal enjoyment, you can generally deduct your mortgage interest and real estate taxes, as you would on a primary residence. Use Schedule A to take the deductions.
The IRS even allows you to rent out your vacation home for up to 14 days a year without paying taxes on the rental income. You might be able to deduct any uninsured casualty losses too, though you can’t write off rental-related expenses. (More on those below.) If the home is rented for more than 14 days, you must claim the income.
Now, if you own what you consider a vacation home but never visit it, or only rent it out, other tax rules apply. Without personal use the home is considered an investment or rental property by the IRS. Time spent checking in on a house or making repairs doesn’t count as personal use.
Tax deductions for rental owners
As an exclusive rental property, you can deduct numerous expenses including taxes, insurance, mortgage interest, utilities, housekeeping, and repairs. Even towels and sheets are deductible. Use Schedule E. You can also write off depreciation, the value lost due to the wear and tear a home experiences over time.
Treat the rental property like a business, says Mark Steber, chief tax officer at Jackson Hewitt Tax Services. Keep detailed records and maintain a separate checking account. Figure you’ll spend a couple of hours a week, on average, over the course of the year managing the property.
To maximize deductions you need to be actively involved in the rental property. That means performing such duties as approving new tenants and coming up with rental terms. You also need to own at least 10% of the property. See IRS Publication 527 for details.
If your adjusted gross income is $100,000 or less you can deduct from your taxable income up to $25,000 in rental losses—that is, the difference between your rental income and your rental expenses. The deduction gradually phases out between an AGI of $100,000 and $150,000. You may be able to carry forward excess losses to future years, or use losses to offset taxable gains when you sell.
Expenses can add up. HOA fees (average: $420), routine maintenance costs ($360), and six months’ worth of utilities ($1,100) alone total nearly $2,000. By deducting $2,000 from taxable income of $100,000, a married couple filing jointly would cut their tax bill by $488.
Mixed use of a vacation home
The tax picture gets more complicated when in the same year you make personal use of your vacation home and rent it out for more than 14 days. Remember, rental income is tax-free only if you rent for 14 days or fewer.
The key to maximizing deductions is keeping annual personal use of your vacation home to fewer than 15 days or 10% of the total rental days, whichever is greater. In that case the vacation home can be treated as a rental, meaning you get the same generous deductions. To avoid going over the 10% limit, essentially you shouldn’t use your vacation home more than one day for every 10 days you rent it.
Make personal use of your vacation home for more than 14 days (or more than 10% of the total rental days), however, and your deductions may be limited. If your rental income is less than your rental expenses, for example, you can’t use the loss to offset other sources of income. There’s a worksheet that determines which expenses you can carry over to the following year.
Another big blow: The IRS requires you to divide expenses between personal use and rental use. Let’s say you have a vacation home you personally use for 25 days and rent for 75 days. That’s 100 total days of use. You can only write off 75% of the expenses as rental expenses—75 rental days divided by 100 total days of use works out to 75%. Some of the personal expenses, such as mortgage interest and real estate taxes, may be deductible on Schedule A.
IRS closes tax loophole
A popular strategy used by owners of vacation homes to avoid paying capital gains on a sale was to convert a vacation home into a primary residence. This was accomplished by living in the home for two years out of the previous five before selling. By doing so a gain on the sale of up to $250,000 for single filers ($500,000 for married filing jointly) was tax-free.
The IRS hasn’t done away with the cap-gains exclusion, but it is closing the loophole for vacation homes. Starting in 2009, you have to pay regular cap-gains taxes on the portion of the gain that’s equivalent to the time you used the home as a vacation home after 2008.
Let’s say on Jan. 1, 2010, you move into a vacation home you bought on Jan. 1, 2002. Two years later you qualify for the cap-gains exclusion and decide to sell. You’d pay regular capital gains on 10% of the gain because in 2009 the home was a vacation home subject to the new IRS rules. The other nine years—2002 to 2008, when the old rules applied, and 2010 to Jan. 1, 2012, when the home was used as a primary residence—qualify for the exclusion.
This article provides general information about tax laws and consequences, but is not intended to be relied upon by readers as tax or legal advice applicable to particular transactions or circumstances. Readers should consult a tax professional for such advice, and are reminded that tax laws may vary by jurisdiction.
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Article was written by Donna Fuscaldo, who has written about personal finance for more than 10 years at the Wall Street Journal, Dow Jones Newswires, and Fox Business. She one day hopes to own a vacation home in the Catskills of New York.
Don’t limit your notion of a vacation home to a beach cottage or a mountain cabin. Even RVs and boats can count, as long as there are sleeping, cooking, and bathroom facilities. Tax deductions for vacation homes are complex, so consult a tax adviser.
Is your vacation home a vacation home?
If you bought your vacation home exclusively for personal enjoyment, you can generally deduct your mortgage interest and real estate taxes, as you would on a primary residence. Use Schedule A to take the deductions.
The IRS even allows you to rent out your vacation home for up to 14 days a year without paying taxes on the rental income. You might be able to deduct any uninsured casualty losses too, though you can’t write off rental-related expenses. (More on those below.) If the home is rented for more than 14 days, you must claim the income.
Now, if you own what you consider a vacation home but never visit it, or only rent it out, other tax rules apply. Without personal use the home is considered an investment or rental property by the IRS. Time spent checking in on a house or making repairs doesn’t count as personal use.
Tax deductions for rental owners
As an exclusive rental property, you can deduct numerous expenses including taxes, insurance, mortgage interest, utilities, housekeeping, and repairs. Even towels and sheets are deductible. Use Schedule E. You can also write off depreciation, the value lost due to the wear and tear a home experiences over time.
Treat the rental property like a business, says Mark Steber, chief tax officer at Jackson Hewitt Tax Services. Keep detailed records and maintain a separate checking account. Figure you’ll spend a couple of hours a week, on average, over the course of the year managing the property.
To maximize deductions you need to be actively involved in the rental property. That means performing such duties as approving new tenants and coming up with rental terms. You also need to own at least 10% of the property. See IRS Publication 527 for details.
If your adjusted gross income is $100,000 or less you can deduct from your taxable income up to $25,000 in rental losses—that is, the difference between your rental income and your rental expenses. The deduction gradually phases out between an AGI of $100,000 and $150,000. You may be able to carry forward excess losses to future years, or use losses to offset taxable gains when you sell.
Expenses can add up. HOA fees (average: $420), routine maintenance costs ($360), and six months’ worth of utilities ($1,100) alone total nearly $2,000. By deducting $2,000 from taxable income of $100,000, a married couple filing jointly would cut their tax bill by $488.
Mixed use of a vacation home
The tax picture gets more complicated when in the same year you make personal use of your vacation home and rent it out for more than 14 days. Remember, rental income is tax-free only if you rent for 14 days or fewer.
The key to maximizing deductions is keeping annual personal use of your vacation home to fewer than 15 days or 10% of the total rental days, whichever is greater. In that case the vacation home can be treated as a rental, meaning you get the same generous deductions. To avoid going over the 10% limit, essentially you shouldn’t use your vacation home more than one day for every 10 days you rent it.
Make personal use of your vacation home for more than 14 days (or more than 10% of the total rental days), however, and your deductions may be limited. If your rental income is less than your rental expenses, for example, you can’t use the loss to offset other sources of income. There’s a worksheet that determines which expenses you can carry over to the following year.
Another big blow: The IRS requires you to divide expenses between personal use and rental use. Let’s say you have a vacation home you personally use for 25 days and rent for 75 days. That’s 100 total days of use. You can only write off 75% of the expenses as rental expenses—75 rental days divided by 100 total days of use works out to 75%. Some of the personal expenses, such as mortgage interest and real estate taxes, may be deductible on Schedule A.
IRS closes tax loophole
A popular strategy used by owners of vacation homes to avoid paying capital gains on a sale was to convert a vacation home into a primary residence. This was accomplished by living in the home for two years out of the previous five before selling. By doing so a gain on the sale of up to $250,000 for single filers ($500,000 for married filing jointly) was tax-free.
The IRS hasn’t done away with the cap-gains exclusion, but it is closing the loophole for vacation homes. Starting in 2009, you have to pay regular cap-gains taxes on the portion of the gain that’s equivalent to the time you used the home as a vacation home after 2008.
Let’s say on Jan. 1, 2010, you move into a vacation home you bought on Jan. 1, 2002. Two years later you qualify for the cap-gains exclusion and decide to sell. You’d pay regular capital gains on 10% of the gain because in 2009 the home was a vacation home subject to the new IRS rules. The other nine years—2002 to 2008, when the old rules applied, and 2010 to Jan. 1, 2012, when the home was used as a primary residence—qualify for the exclusion.
This article provides general information about tax laws and consequences, but is not intended to be relied upon by readers as tax or legal advice applicable to particular transactions or circumstances. Readers should consult a tax professional for such advice, and are reminded that tax laws may vary by jurisdiction.
------------------------
Article was written by Donna Fuscaldo, who has written about personal finance for more than 10 years at the Wall Street Journal, Dow Jones Newswires, and Fox Business. She one day hopes to own a vacation home in the Catskills of New York.
Thursday, August 12, 2010
30 ACRE FARM FOR SALE IN GALLATIN
This 30 Acre Farm, currently used for raising horses, is located on a quiet country road in the town of Gallatin, in Columbia County. It consists of a Ranch-style home built in 1951, with 1,344 sqft of living area, oil hot water heat, 3 bedrooms, 1 bath, living room, Eat-in-Kitchen, woodstove in living room. Appliances included: Clothes Washer and Dryer, Stove and Refrigerator. There is also an 8 stall horse barn, an old heffer barn in poor condition, tool shed, garage, paddock areas, fields and a stream. The property is almost all open and cleared and consists of rolling hills. The privacy and views are spectacular.
Click on the link below to see pictures and more information:
http://www.grayrider.com/FarmForSale-Gallatin-30acres.htm
Click on the link below to see pictures and more information:
http://www.grayrider.com/FarmForSale-Gallatin-30acres.htm
RECORD LOW RATES DO LITTLE TO INCREASE MORTGAGE DEMAND
Mortgage interest rates have been hovering at their lowest levels in decades, but that’s done little to sway consumers to buy a home or refinance their mortgage to take advantage of the interest savings.
The Mortgage Bankers Association (MBA) reported Wednesday that for the week ending August 6, 2010, mortgage loan application volume remained relatively flat from the already-depressed level of the week before.
Total app volume increased just 0.6 percent from week-to-week. MBA’s refinance index was up 0.6 percent, while the purchase index rose only 0.3 percent.
The poor weekly showing comes despite the fact that mortgage interest rates again hit new record-lows during the period.
MBA reported that the average contract interest rate for 30-year fixed-rate mortgages (FRMs) decreased to 4.57 percent, down from 4.60 percent the week before. This was the lowest 30-year contract rate ever recorded in the history of MBA’s survey.
The average contract interest rate for 15-year FRMs dropped to 3.95 percent from 4.03 percent the previous week. And again, this was the lowest 15-year rate ever recorded by MBA.
Freddie Mac, too, has been tracking mortgage interest rates, and the GSE says we’re currently seeing the lowest conventional fixed-rates available in more than 50 years. So, why aren’t consumers taking advantage of today’s favorable and affordable market conditions?
The economists at Freddie Mac say that under normal circumstances, such low rates would support home purchases and generate substantial refinance activity. For example, they point to 2003, when mortgage rates hit the
then-record low of 5.21 percent. At that time, nearly $4 trillion in new mortgages were originated, with refinances making up 70 percent or roughly $2.7 trillion.
But the nation’s recession and the subprime credit crisis “have left us with anything but normal conditions today,” Freddie’s economists said in commentary released Wednesday. They note that mortgage origination forecasts are well below half of what occurred in 2003.
One reason Freddie gives for the “missing” originations is that more and more people are paying in cash. The National Association of Realtors reports that nearly a quarter of existing-home sales in 2010 have been all-cash transactions. Freddie says similarly, more than 20 percent of borrowers in the past few quarters have been paying down their principal balance with cash during a refinance.
A second reason why originations are lower than one might expect is that home value declines have eroded equity so much in some neighborhoods that the borrower no longer qualifies for a low-loan-to-value refinance, Freddie said.
Second liens are also posing a problem. Freddie’s economists explained that if the second lien is not paid off, then the second lien-holder will be requested to resubordinate their loan to the new (refinanced) first-lien loan. They say some potential borrowers have run into trouble getting second-lien lenders to submit the resubordination paperwork on time, in some cases forcing borrowers to forego refinance altogether.
Freddie says origination volumes are also running at low levels because home sales volumes are low. The GSE’s economists referenced the Conference Board’s Consumer Research Center Survey for July, which includes and index for “plans to buy a home within the next six months.” The index is at its third-lowest level since the survey began in 1978.
Freddie contends that potential homebuyers remain concerned by the possibility of continuing home value declines and are nervous about investing in homes, absent big incentives.
“Whether on-the-fence homebuyers and potential refinancers will soon take advantage of the historic opportunities presented by the lowest mortgage rates in five decades remains to be seen, but we’re not counting on a change anytime soon,” Freddie’s economists said in their report.
©2010 DS News. All Rights Reserved.
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Article written by Carrie Bay - http://www.dsnews.com/
The Mortgage Bankers Association (MBA) reported Wednesday that for the week ending August 6, 2010, mortgage loan application volume remained relatively flat from the already-depressed level of the week before.
Total app volume increased just 0.6 percent from week-to-week. MBA’s refinance index was up 0.6 percent, while the purchase index rose only 0.3 percent.
The poor weekly showing comes despite the fact that mortgage interest rates again hit new record-lows during the period.
MBA reported that the average contract interest rate for 30-year fixed-rate mortgages (FRMs) decreased to 4.57 percent, down from 4.60 percent the week before. This was the lowest 30-year contract rate ever recorded in the history of MBA’s survey.
The average contract interest rate for 15-year FRMs dropped to 3.95 percent from 4.03 percent the previous week. And again, this was the lowest 15-year rate ever recorded by MBA.
Freddie Mac, too, has been tracking mortgage interest rates, and the GSE says we’re currently seeing the lowest conventional fixed-rates available in more than 50 years. So, why aren’t consumers taking advantage of today’s favorable and affordable market conditions?
The economists at Freddie Mac say that under normal circumstances, such low rates would support home purchases and generate substantial refinance activity. For example, they point to 2003, when mortgage rates hit the
then-record low of 5.21 percent. At that time, nearly $4 trillion in new mortgages were originated, with refinances making up 70 percent or roughly $2.7 trillion.
But the nation’s recession and the subprime credit crisis “have left us with anything but normal conditions today,” Freddie’s economists said in commentary released Wednesday. They note that mortgage origination forecasts are well below half of what occurred in 2003.
One reason Freddie gives for the “missing” originations is that more and more people are paying in cash. The National Association of Realtors reports that nearly a quarter of existing-home sales in 2010 have been all-cash transactions. Freddie says similarly, more than 20 percent of borrowers in the past few quarters have been paying down their principal balance with cash during a refinance.
A second reason why originations are lower than one might expect is that home value declines have eroded equity so much in some neighborhoods that the borrower no longer qualifies for a low-loan-to-value refinance, Freddie said.
Second liens are also posing a problem. Freddie’s economists explained that if the second lien is not paid off, then the second lien-holder will be requested to resubordinate their loan to the new (refinanced) first-lien loan. They say some potential borrowers have run into trouble getting second-lien lenders to submit the resubordination paperwork on time, in some cases forcing borrowers to forego refinance altogether.
Freddie says origination volumes are also running at low levels because home sales volumes are low. The GSE’s economists referenced the Conference Board’s Consumer Research Center Survey for July, which includes and index for “plans to buy a home within the next six months.” The index is at its third-lowest level since the survey began in 1978.
Freddie contends that potential homebuyers remain concerned by the possibility of continuing home value declines and are nervous about investing in homes, absent big incentives.
“Whether on-the-fence homebuyers and potential refinancers will soon take advantage of the historic opportunities presented by the lowest mortgage rates in five decades remains to be seen, but we’re not counting on a change anytime soon,” Freddie’s economists said in their report.
©2010 DS News. All Rights Reserved.
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Article written by Carrie Bay - http://www.dsnews.com/
Monday, August 9, 2010
FHA ROLLS OUT PRINCIPAL REDUCING REFIS FOR UNDERWATER BORROWERS
Nearly a quarter of U.S. homeowners with a mortgage owe more on the loan than their home is worth, and home prices are threatening to fall further and push even more borrowers underwater. The Federal Housing Administration (FHA), though, is throwing out a lifeline.
Starting September 7, the federal agency will offer new FHA-insured mortgages to certain underwater, non-FHA borrowers who are current on their mortgage payments and whose lenders agree to write off at least 10 percent of the unpaid principal balance.
This last part could prove to be the caveat that leads the new FHA refi program down the same road as the federal government’s other housing programs – a road of below par results and public criticism.
Lenders are fantastically reluctant to write down mortgage principals. It would mean either they or their mortgage investors would have to eat the amount of debt that’s forgiven, and it could set a precedent that a loan contract is not a contract at all if the terms spelled out in black and white can be changed based on market nuances, such as a slump in real estate values.
The FHA refi program for underwater borrowers was originally announced in March as part of the administration’s expanded foreclosure prevention strategy. On Friday, FHA and HUD published a mortgagee letter explaining to lenders the details of the new negative equity refinancing program.
To be eligible for a new loan, the homeowner must owe more on their mortgage than their home is worth, be current on their existing mortgage, and occupy the property as their primary residence. The homeowner must qualify for the new loan under standard FHA underwriting requirements and have a credit score equal of at least 500.
Participation in the program is voluntary and requires the consent of all lien holders. The borrower’s existing first lien holder must agree to write off at least 10 percent of their unpaid principal balance to bring the borrower’s combined loan-to-value ratio to no more than 115 percent.
In addition, the existing loan to be refinanced must not be an FHA-insured loan, and the refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent.
To facilitate the refinancing of new FHA-insured loans under this program, the Treasury will provide incentives to existing second lien holders who agree to full or partial extinguishment of the liens.
Servicers planning to take part in the new program must execute a Servicer Participation Agreement (SPA) with Fannie Mae by October 3, 2010.
HUD says interested homeowners should contact their lenders to determine if they are eligible and whether the lender agrees to write down a portion of the unpaid principal.
FHA Commissioner David H. Stevens, said, “This is another tool to help overcome the negative equity problem facing many responsible homeowners who are looking to refinance into a safer, more secure mortgage product.”
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Article written by Carrie Bay - DSNews.com
Starting September 7, the federal agency will offer new FHA-insured mortgages to certain underwater, non-FHA borrowers who are current on their mortgage payments and whose lenders agree to write off at least 10 percent of the unpaid principal balance.
This last part could prove to be the caveat that leads the new FHA refi program down the same road as the federal government’s other housing programs – a road of below par results and public criticism.
Lenders are fantastically reluctant to write down mortgage principals. It would mean either they or their mortgage investors would have to eat the amount of debt that’s forgiven, and it could set a precedent that a loan contract is not a contract at all if the terms spelled out in black and white can be changed based on market nuances, such as a slump in real estate values.
The FHA refi program for underwater borrowers was originally announced in March as part of the administration’s expanded foreclosure prevention strategy. On Friday, FHA and HUD published a mortgagee letter explaining to lenders the details of the new negative equity refinancing program.
To be eligible for a new loan, the homeowner must owe more on their mortgage than their home is worth, be current on their existing mortgage, and occupy the property as their primary residence. The homeowner must qualify for the new loan under standard FHA underwriting requirements and have a credit score equal of at least 500.
Participation in the program is voluntary and requires the consent of all lien holders. The borrower’s existing first lien holder must agree to write off at least 10 percent of their unpaid principal balance to bring the borrower’s combined loan-to-value ratio to no more than 115 percent.
In addition, the existing loan to be refinanced must not be an FHA-insured loan, and the refinanced FHA-insured first mortgage must have a loan-to-value ratio of no more than 97.75 percent.
To facilitate the refinancing of new FHA-insured loans under this program, the Treasury will provide incentives to existing second lien holders who agree to full or partial extinguishment of the liens.
Servicers planning to take part in the new program must execute a Servicer Participation Agreement (SPA) with Fannie Mae by October 3, 2010.
HUD says interested homeowners should contact their lenders to determine if they are eligible and whether the lender agrees to write down a portion of the unpaid principal.
FHA Commissioner David H. Stevens, said, “This is another tool to help overcome the negative equity problem facing many responsible homeowners who are looking to refinance into a safer, more secure mortgage product.”
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Article written by Carrie Bay - DSNews.com
Friday, August 6, 2010
CONGRESS PASSES BILL INCREASING FHA PREMIUMS
The Federal Housing Administration (FHA) has received congressional approval to raise borrowers’ annual premiums for single-family mortgage insurance.
House Resolution (HR) 5891 passed the Senate late Wednesday. It cleared the House last Friday, and now heads to President Obama’s desk for final sign-off.
The bill allows FHA to increase the statutory cap of the annual fee charged for federal mortgage insurance three-fold, from 0.55 percent to 1.55 percent.
On April 5th, FHA raised borrowers’ up-front mortgage insurance premiums from 1.75 percent to 2.25 percent – a move that did not require congressional approval. Now that the agency has been granted the authority to raise the annual fees assessed, FHA has said it will shift some of the premium increase from up-front to the annual cost, which is paid over the life of the loan instead of at the time of closing.
FHA Commissioner David Stevens has indicated that he may not need to raise premiums to the maximum.
Robert Story, Jr., chairman of the Mortgage Bankers Association (MBA) says a small increase in the annual premium, coupled with a decrease in FHA’s upfront premium, will help stabilize FHA while lowering closing costs for many borrower
The premium increases give FHA a means of increasing its capital reserve funds, which as of the end of fiscal year 2009 had deteriorated to its lowest level in the agency’s 75-year history. FHA is required by law to keep its capital reserve nest egg at a minimum of 2 percent of all the mortgages it insures against default. But rising delinquencies and the stress of the nation’s housing woes pushed the agency’s reserve purse to just 0.53 percent last year.
A larger FHA reform bill – which includes not only the premium increase, but also gives FHA greater enforcement authority against lenders who originate bad loans – is currently on the legislative table. And although the House had already approved the full-length reform bill, lawmakers pulled out the provision for the premium increase and made it a separate measure to speed its passage before the Senate recesses on August 7.
Both chambers of Congress also passed a companion standalone bill that addresses FHA’s multi-family business, which is being sent to the president along with HR 5891.
House Resolution 5872 increases FHA’s commitment authority for its multifamily insurance programs by $5 billion for the remainder of the fiscal year. Without this increase, FHA would have exhausted its current authority sometime in mid-August and would have been forced to stop issuing any commitments to insure the loans in their current pipeline of applications until the next fiscal year, which begins October 1st.
“FHA’s multifamily programs have been a critical source of funding to build and renovate multifamily and rental housing during the recent credit crunch,” Story commented. “MBA has been working tirelessly with officials at FHA and on Capitol Hill to help keep the program up and running and we are gratified that Congress acted before a shutdown became reality.”
------------------
Article written by Carrie Bay - DSNews.com
House Resolution (HR) 5891 passed the Senate late Wednesday. It cleared the House last Friday, and now heads to President Obama’s desk for final sign-off.
The bill allows FHA to increase the statutory cap of the annual fee charged for federal mortgage insurance three-fold, from 0.55 percent to 1.55 percent.
On April 5th, FHA raised borrowers’ up-front mortgage insurance premiums from 1.75 percent to 2.25 percent – a move that did not require congressional approval. Now that the agency has been granted the authority to raise the annual fees assessed, FHA has said it will shift some of the premium increase from up-front to the annual cost, which is paid over the life of the loan instead of at the time of closing.
FHA Commissioner David Stevens has indicated that he may not need to raise premiums to the maximum.
Robert Story, Jr., chairman of the Mortgage Bankers Association (MBA) says a small increase in the annual premium, coupled with a decrease in FHA’s upfront premium, will help stabilize FHA while lowering closing costs for many borrower
The premium increases give FHA a means of increasing its capital reserve funds, which as of the end of fiscal year 2009 had deteriorated to its lowest level in the agency’s 75-year history. FHA is required by law to keep its capital reserve nest egg at a minimum of 2 percent of all the mortgages it insures against default. But rising delinquencies and the stress of the nation’s housing woes pushed the agency’s reserve purse to just 0.53 percent last year.
A larger FHA reform bill – which includes not only the premium increase, but also gives FHA greater enforcement authority against lenders who originate bad loans – is currently on the legislative table. And although the House had already approved the full-length reform bill, lawmakers pulled out the provision for the premium increase and made it a separate measure to speed its passage before the Senate recesses on August 7.
Both chambers of Congress also passed a companion standalone bill that addresses FHA’s multi-family business, which is being sent to the president along with HR 5891.
House Resolution 5872 increases FHA’s commitment authority for its multifamily insurance programs by $5 billion for the remainder of the fiscal year. Without this increase, FHA would have exhausted its current authority sometime in mid-August and would have been forced to stop issuing any commitments to insure the loans in their current pipeline of applications until the next fiscal year, which begins October 1st.
“FHA’s multifamily programs have been a critical source of funding to build and renovate multifamily and rental housing during the recent credit crunch,” Story commented. “MBA has been working tirelessly with officials at FHA and on Capitol Hill to help keep the program up and running and we are gratified that Congress acted before a shutdown became reality.”
------------------
Article written by Carrie Bay - DSNews.com
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