The Mortgage Bankers Association reported this month that refinancing applications are up 26% during the past four weeks and account for about 82% of all mortgage applications. Not since May 2009 has the volume of refinancing applications been higher.

“We are extremely busy, and it feels good,” said Charles DiPino, Jr., a senior vice president at New Penn Financial, a mortgage banker in Columbia, Md. “The phones are ringing off the hook.”

The calls started coming during the past month or so as rates continued to drop week after week. Mortgage giant Freddie Mac last week reported the average 30-year fixed-rate loan dropped to an average of 4.36%, a rate not seen since March 1953. (Harry S. Truman was president then, and the Academy Awards was shown on TV for the first time.)

Meanwhile, the 15-year fixed-rate mortgage hit a record low of 3.86% last week; while a one-year adjustable-rate mortgage averaged 3.52%, more than a percentage point lower than a year ago, according to Freddie Mac.

“Rates continue to hit new lows because of the weak U.S. economic recovery and the concern that it could fizzle altogether,” said Greg McBride, senior financial analyst with Bankrate.com.

But McBride and others advise against waiting to refinance in hopes that rates will fall further. If they do keep falling, that means the economy is getting even more anemic.

“You can win the battle and lose the war,” McBride said. “You might lose your job and not qualify for the lower rate.”

Refinancing to a lower rate, of course, can reduce your monthly payment. But some homeowners are refinancing to shorten the term of their loan, particularly baby boomers who don’t want this debt hanging over them in retirement, McBride said. And some want to trade in the uncertainty of an adjustable-rate mortgage for the dependability of a fixed-rate loan, he says.

Amy Crews Cutts, Freddie Mac’s deputy chief economist, said despite the uptick in refinancing applications, the numbers still aren’t as high as they should be, given the record-low rates.

Homeowners could be having difficulty qualifying, Cutts said. It could be their creditworthiness has deteriorated. Or their income dropped because of a loss of overtime or they were forced to take a new job that pays less, she says.

So who can qualify for these great rates?

“We’re still in a very tight credit market,” DiPino said. Homeowners with credit scores of 660 or 680 can qualify for refinancing, but the best rates are reserved for those with scores above 700, he says.

Also, generally if you don’t have a certain amount of equity in your home—20% for the very best rates—you might have to pony up more cash to get a new loan, McBride said. Homeowners’ equity has fallen along with a drop in home prices or because they took money out of their house the last time they refinanced, he says.

Some homeowners, though, won’t need that much equity in their homes to get super-low rates if they qualify for a streamlined refinancing program for loans owned by Freddie Mac or Fannie Mae, said DiPino, the mortgage banker. The program, which requires passing a credit check, is designed for those seeking a lower monthly payment, he says. In other words, you can’t refinance to tap the equity in your home.

Of course, there are other factors to consider, such as how long you’ll remain in the house before determining whether refinancing is for you. But with rates these low, it’s worth taking a look.

Should you refinance?
Mortgage rates hitting the lowest levels in decades have caused a rush of refinancing. Check out calculators at Bankrate.com to see if refinancing is worthwhile. The refinance calculator can tell you how much you’ll save and how long you must live in the house to recoup refinancing costs. The FICO score estimator will give you an idea of your credit score. To qualify for the best terms, you’ll need a score in the 700s.

(c) 2010, The Baltimore Sun.

Distributed by McClatchy-Tribune Information Services.

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The Pending Home Sales Index, a forward-looking indicator, rose 5.2% to 79.4 based on contracts signed in July from a downwardly revised 75.5 in June, but remains 19.1% below July 2009 when it was 98.1. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, cautioned that there would be a long recovery process. “Home sales will remain soft in the months ahead, but improved affordability conditions should help with a recovery,” he said. “But the recovery looks to be a long process. Home buyers over the past year got a great deal, and buyers for the balance of this year have an edge over sellers. 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.”

Yun added, “Affordability could reach a generational high in the second half of this year because of rock-bottom mortgage interest rates, helped partly by the Fed’s very accommodative monetary policy. The loan underwriting standards are tighter, but home buyers can improve their chances of getting a loan by staying well within their budget.”

The PHSI in the Northeast rose 6.3% to 62.5 in July but is 21.1% below a year ago. In the Midwest the index increased 4.1% to 66.7 but remains 25.7% below July 2009. Pending home sales in the South rose 1.2% to an index of 86.3, but are 15.6% lower than a year ago. In the West the index jumped 11.6% to 95.0 but is 17.6% below July 2009.

The national index had fallen 29.9% in May and another 2.8% in June.

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If you are looking to reduce your eco footprint without spending extra money this back-to-school season, here are a few ideas to get you started.

If your child will carry a lunchbox this year, strive to pack lunches that are 100% waste-free. Start with a reusable lunchbox or bag, keeping an eye open for one made from recycled material. Invest in a few reusable food containers to cut down on those single-use plastic baggies.

Keep in mind the types of food items you’ll be packing as you choose between sizes. And don’t forget you can reuse small plastic containers of foods that you’ve already purchased such as lunchmeats, cheeses and butter. Fill up a reusable bottle with your child’s favorite drink to keep them hydrated throughout the day.

As for cutlery, pack a cheap fork and spoon and then toss in a reusable napkin or one made from recycled paper. Don’t worry about reusable items being tossed in the trash because with this lunch system, your kids won’t need to visit the garbage can. Everything gets packed up and comes right back home. You can also save money on your weekly grocery shopping by choosing bulk food items and creating your own single size servings.

School supplies are a biggie. Before shopping, make sure there aren’t perfectly good backpacks, binders, or pencil pouches from last year that you can reuse. If you do need to go new, look for binders and clipboards made from recycled plastic or notebooks and journals constructed of recycled paper. Even cool pencil pouches can be found made from recycled juice boxes, among other things.

And who can forget the new clothes? We know kids agonize over the perfect back-to-school outfits, but you don’t need to break the bank to get them dressed. Children and teen resale shops have brand name clothes in gently used, broken-in condition. Sometimes you even get lucky and find brand new items with the tags still attached.

Another idea, especially for girls, is to host a clothing swap before school starts. Have each girl bring gently used items they no longer wear and let them swap with their friends.

For new clothing items, look for ones made from sustainable sources and treated with minimal amounts of potentially hazardous chemicals. Items made of organic cotton and denim are a good place to start. Try to avoid clothing labeled wrinkle resistant, stain-proof or odor resistant, which are commonly treated with untested chemicals.

There’s no better time than right now to make sure your kids are practicing the three R’s—reduce, reuse and recycle. Do your part and teach them how they too can help care for our planet by giving used items a second life and choosing products made from recycled materials.

(c) 2010, The Charlotte Observer (Charlotte, N.C.).

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“I just started one of these projects,” said interior designer Alan Karlin in Kansas City, Kan. “People want a place to neatly put their shoes and purses, a place they can just step into and not jump from closet to closet to get dressed in the morning.”

Bedrooms-morphed-into-dressing-rooms are especially desirable in older homes, which can be storage-challenged. Intrepid homeowners are taking advantage of smaller rooms near the master bedroom, and they’re stealing ideas from department store and boutique dressing rooms to go along with the clothing racks: plush ottoman seating, stylish chandeliers, art on the walls and full-length mirrors.

Some residential dressing rooms even incorporate built-in cabinetry with glass doors and storage islands with natural-stone countertops and customized drawer organizers akin to high-end kitchens.

Still, dressing rooms can be more practical than luxurious, said Mike McMahon of Life Uncluttered in Overland Park, Kan. “Electricity doesn’t have to be upgraded, and walls don’t have to be knocked down,” said McMahon, who designs and installs storage. “The equipment doesn’t have to be expensive. And it can be taken down and moved if the homeowner decides to relocate in the future.”

Karlin says effective clothing organization is key to a home functioning and looking better. For that same reason, he is also a big fan of mudrooms, a place to store sports equipment, backpacks and the rest of the everyday stuff we dump after school or work. “People are repurposing their laundry rooms off the kitchen and turning them into mudrooms,” Karlin said. “And then they’re moving their laundry rooms upstairs near the bedrooms where the clothes are. It makes sense.”

A few years ago, Beth Stedry of Leawood, Kan., converted her dining room into a mudroom, a risky move because the traditional catchall spot is one of the first areas you see when you walk in the door. But the attractive built-in cabinetry creates a surprisingly eye-catching focal point. Most important, it’s functional.

“I shudder to think of life without it,” said Stedry, a mother of three boys who is expecting another baby in September. “It makes such a huge difference, because each person has his or her own place to deposit their stuff.”

Each cubby has hooks, perfect for beach towels in summer and coats in winter. A shelf at the bottom stores shoes; it’s removable so it can hold boots in the cold months. Stedry’s husband, Todd, keeps running gear in his. And there are spots to conceal cell phone chargers.

The Stedry family also changed the formal living room into a casual dining room with a sturdy harvest table. “All of this works better,” Stedry said. “And it’s nice and cozy to have a dining room with a fireplace.”

Dining rooms often are rethought these days as more families eat casual meals in the kitchen or on-the-go. Another common change is turning screened porches—sometimes storage dumping grounds—into family rooms that can be used year-round. Although initially that seems like an inexpensive conversion, it can get pricy, said Bo Steed of Steed Remodeling in Kansas City, Mo. “It can be $20,000 or $30,000,” Steed said. “You’re adding windows and walls and heating and cooling and flooring.”

Another thing homeowners are considering is creating a place to relax with wine and friends. Some people are switching butler’s pantries into wine bars and extra family living areas into tasting rooms.

“We’ve turned unused basement cellars into wine cellars,” said Kevin Transue, co-owner and principal designer at CHC Creative Remodeling of Lenexa, Kan. “With a little imagination, the most unattractive space can be really beautiful and functional.”

Room-to-room
Of course, unused and unfinished attic and basement spaces have loads of potential. But you can save money if you simply repurpose an existing, finished space.

Dining room: A library-style office with bookshelves and a table that can be used as a desk or for a small dinner party. Or a music room, playroom or game room.
Living room: A cozy dining room or office.
Spare bedroom: Fitness room, man cave or project space.

Rethinking your space:
-Evaluate which rooms get cluttered and which go unused.
-Think about activities you want to do for which there isn’t room.
-Write an action plan of what would need to change for a room to accommodate that activity.
-Tear out photos for an idea file.
-Do the work yourself or hire a professional architect, designer and/or contractor to help.

(c) 2010, The Kansas City Star.

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“Get it clean, clean, clean,” said Rinomato. “If your house isn’t clean, it instantly sends up negative thoughts that the home is not well maintained. If your house is spotless, you’re ahead of the game,” she said.

But don’t stop there, advised Rinomato. To increase your chances of making a sale, “stage” the house to make it as attractive as possible. Until recently, “Staging meant pulling out all the stops—setting the dining table with your best china and crystal, arranging flowers, lighting candles,” she said. “Now we take the minimalist approach. Basically, you want to strip the house to its bare essentials, depersonalize it so potential buyers can superimpose themselves and their lifestyle on the house.”

Rinomato offered the following tips for staging a home:

1. Visit model homes and examine shelter magazines for inexpensive decorating ideas. Always keep in mind you are not decorating for yourself but for the general public.

2. Start with the outside. Give the house a fresh coat of paint, add shiny hardware to the front door and plant a few flowers to send a subliminal message the house is loved and well cared for.

3. Declutter every room to make it look larger. Get rid of family pictures, trophies and knickknacks. Closets and drawers should be no more than 30% full.

4. Invest in eco-friendly but bright lights. Open the drapes or remove them completely. “Light, bright rooms give the impression this is a happy place—and everyone wants to move into a happy place,” said Rinomato.

5. Feature only a few pieces of furniture with mainstream appeal. Pull pieces away from walls to make rooms look bigger.

6. Make sure a room’s primary use is obvious. A bedroom should look like a bedroom, not an office, hobby center or gym.

7. Bedrooms and kitchens are difficult to stage because they are in daily use, but make the effort. Clear everything off the counters and nightstands, roll up the rugs and hide the laundry hamper. Buff the cabinets with car wax and clean under the sinks. Invest in pristine white bed linens and towels.

8. Minimize the “pet effect.” Remove food bowls and litter boxes to the utility room. Deodorize thoroughly.

9. Organize the utility room and garage. Hang up the bicycles, roll up the hose. Renting a storage locker is worth the cost if it helps you sell faster and for a higher price.

10. Once your house is staged, invite your friends or Realtor over and walk them through to get an objective opinion.

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The HOI indicated that 72.3% of all new and existing homes sold in the second quarter of 2010 were affordable to families earning the national median income of $64,400. The index for the second quarter was slightly more affordable than the previous quarter and almost equaled the record-high 72.5% set during the first quarter of 2009. Until 2009, the HOI rarely topped 67% and never reached 70%.

“Homeownership is within reach of more households than it has been for almost a generation,” said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. “Interest rates continue to hover at historic low levels, the economy is beginning to rebound and with house prices starting to stabilize, conditions are beginning to draw home buyers back into the market, which is a positive step on the path to recovery.”

Syracuse, N.Y., was the most affordable major housing market in the country, edging out Indianapolis-Carmel, Ind., which had held the top ranking for nearly five years. In Syracuse, 97.2% of all homes sold were affordable to households earning the area’s median family income of $64,300.

Also near the top of the list of the most affordable major metro housing markets were Detroit-Livonia-Dearborn, Mich.; Youngstown-Warren-Boardman, Ohio-Pa.; and Buffalo-Niagara Falls, N.Y.

Among smaller housing markets, the most affordable was Springfield, Ohio, where 96.6% of homes sold during the second quarter of 2010 were affordable to families earning a median-income of $56,800. Other smaller housing markets near the top of the index included Mansfield, Ohio; Bay City, Mich.; Monroe, Mich.; and Lansing-East Lansing, Mich., respectively.

New York-White Plains-Wayne, N.Y.-N.J., continued to lead the nation as its least affordable major housing market during the second quarter of 2010. There, 19.9% of all homes sold during the quarter were affordable to those earning the New York area’s median income of $65,600. This was the ninth consecutive quarter that the New York metropolitan division has occupied this position.

The other major metro areas near the bottom of the affordability scale included San Francisco-San Mateo-Redwood City; Santa Ana-Anaheim-Irvine, Calif.; Los Angeles-Long Beach-Glendale, Calif.; and Honolulu, all metro areas that have lingered among the bottom rankings for several quarters.

San Luis Obispo-Paso Robles, Calif., was the least affordable of the smaller metro housing markets in the country during the second quarter. Others near the bottom included Santa Cruz-Watsonville, Calif.; Ocean City, N.J; Santa Barbara-Santa Maria-Goleta, Calif.; and Napa, Calif.

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“I recently worked with clients that were moving to the Northwest Chicago suburbs from out of state,” said Nina Rocus, a Realtor in Schaumburg, Illinois. “They originally looked for homes close to particular school districts, and wanted to move in before the school year started so their son would be enrolled on time for this school year. But because they felt they were running out of time, they ended up renting. They still want to find a home in the spring, so we will start looking again then.”

Because proximity to a quality school is such a high priority for some families as they search for their next home, buyers and sellers in cities with top ranked schools or school districts can often expect to see higher median list prices as compared to the statewide median list price—sometimes as much as 10-28% higher.

“Without a doubt the ‘right’ school district increases value by 12-14% in my area, even in today’s market,” said Maria Picardi-Kenyon, a long-time Realtor located in New Jersey. “I’ve spoken with many clients who are convinced that a preferred school district provides as much as 20 percent or more value to a home.”

To help families as they search for academic excellence and affordable housing during this year’s back to school season, Move, Inc., a leader in online real estate, released the following tips on how to expedite this season’s real estate search before the school bell rings.

Factors associated with selecting housing near quality schools
While the National Education Association’s study on student achievement reports the proximity of affordable housing in stable neighborhoods remains a key component to a student’s success, buyers often consider location to jobs, shopping, freeways and property taxes among other things when searching areas with high ranked school districts.

“Clients focused on a particular school district are often inclined to favor neighborhoods that have great accessibility to community facilities like parks, pools, tennis courts, running/biking trails, as well as access to retail and restaurants,” said Tom Thornton, an EcoBroker with Realty Austin of Austin, Texas. “In Austin, popular neighborhoods with good schools can have an average negotiation range of two to three percent from list price, while the resale advantage can be as much as a five or 10% premium compared to neighborhoods without popular amenities.”

Is bigger better?
The ability to live, earn and learn often comes with a price in communities that serve larger student populations. According to The United States Department of Education, three states—California, Florida and Texas—account for 45 of the nation’s largest public school districts with an average of 169 school choices per district.

Median list prices for single-family homes listed for sale on the Move Network in California, Florida and Texas in July 2010 were $335,000, $215,000 and $179,900 respectively, while the national media price was $212,900 during the same time period.

Average active list prices for single-family homes listed for sale on the Move Network in the nation’s top three largest school districts in July 2010 were $816,545 in New York, $879,743 in Los Angeles, and $425,869 in Chicago.

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Credit Issues by Jeff Mandel and Marlin Brandt

RISMEDIA, August 16, 2010—If you ask your neighbor, your friends or your banker what a credit score is, you’re likely to get all kinds of answers. Which one is right?

-Your credit score is technically a statistical method of assessing your ability and likelihood to pay back your debt (creditworthiness).

-Credit scores are based on several different factors, including your payment history, amount of outstanding debt, length of credit history, use of new credit and types of credit used.

-Credit scores are primarily based on credit report information, which is typically sourced from credit bureaus.

-Credit scores often come from any of the three largest credit bureaus in the U.S. (Experian, Equifax and TransUnion).

-Credit scores range between 300 and 990, depending on the scoring system and algorithms used (i.e., FICO, NextGen, CE Score and VantageScore).

Before there were credit scores, human judgment was the primary factor used to evaluate a borrower’s credit worthiness and/or risk. This process was very subjective and created a lot of variability in the results. Many lenders spent an enormous amount of resources training employees on how to observe consumer credit behavior as the basis for judging risk when lending money. Not only was this a slow process, but due to human error, it was also inconsistent and unreliable.

Lending institutions have created and used credit scoring systems in various forms for around 50 years. However, it was not until the 1980s that scores were somewhat standardized using a point system that scored the primary variables found on an individual’s credit record. This newer system helped to eliminate much of the subjectivity and variability that had existed with other attempts at standardization. However, this process was still connected to the spontaneous measurements of the consumer’s credit report and did not consider the actual payment behaviors of a consumer.

Credit scoring took a major step forward when statistical models began using combinations of credit data. These next generation computer “predictability” models were designed to include payment information from thousands of consumers and were calculated based on a complex mathematical algorithm that generates a credit score the moment a report is ordered. There are literally trillions of score combinations used in the calculations. When combined with computer applications, scoring models have made the process of granting credit extremely efficient and much more objective. Although far from perfect, these models help facilitate commerce by expediting consumers’ ability to get the credit they need in a far more efficient and effective manner than the systems previously used.

As for your answers above, if you checked all the boxes, you were right!

Jeff Mandel is president and Marlin Brandt is COO of ApprovalGUARD.

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RISMEDIA, August 23, 2010—(Real Estate Center) — Some parents are warning their kids not to bank on inheriting the homestead. Why? Because some parents are considering a reverse mortgage. Such mortgages may not be beneficial for everyone, but their popularity is definitely on the rise.

“Reverse mortgages are based on the home’s current value, borrower’s age and existing interest rates,.” said Dr. James Gaines, research economist for the Real Estate Center at Texas A&M University. “Borrowers can choose to receive loan proceeds in a single, lump-sum payment, as periodic predetermined payments, a line of credit or both.

Writing in the July issue of Tierra Grande magazine, the Center’s flagship periodical, Gaines explained the pros and cons of reverse mortgages.

Pros of a Reverse Mortgage
• A reverse mortgage has no fixed due date.
• No repayment is required as long as the home remains the borrower’s principal residence.
• Loans become payable upon death, sale, ceasing to live in the home or failure to keep taxes, insurance or maintenance current.
• Borrowers cannot be foreclosed on.
• Reverse mortgages are nonrecourse loans. The amount owed can never exceed the selling price.
• Borrowers continue to hold title to the property.
• There are flexible payment options.
• Loan proceeds are not taxable.
• Underwriting and approval do not depend on the borrower’s current income or employment status.
• Would-be borrowers are required to meet with an independent financial counselor prior to getting a loan.
• The lender’s lien on the property is removed if the lender fails to make loan advances according to the agreement.

Cons of a Reverse Mortgage
• Homeowners must be at least 62 years old, own their home outright or have high home equity.
• Reverse mortgages provide around 65 percent of the home’s value. Loan-to-value ratios as high as 80 percent may be available to older homeowners, but higher closing costs and fees and shorter life expectancy offset some of this advantage.
• When the borrower dies, the loan and all accrued interest and costs become due and payable, typically necessitating the sale of the home. Heirs wanting the house must repay the entire amount due, which could be greater than the home’s value at the time. Inheritance planning is tricky.
• Relatively high up-front costs mean borrowers need to stay in the home longer (at least ten years) to make the loan financially attractive. This disadvantage has been offset by some lenders eliminating origination fees, setting aside service fees or both.
• Borrowers are responsible for all other ownership costs.
• Homes can be foreclosed on if borrowers cease to live in them for 12 consecutive months or default on any obligation, such as maintenance, taxes or insurance.
• Borrowers may be targets for aggressive sales pitches for other expensive and potentially inappropriate products or services.
• Reverse mortgages are fundamentally different than forward purchase mortgages or home equity loans. Generally, reverse mortgages have more complicated terms and conditions.

For a comprehensive explanation, read “Reverse Mortgages: Alternative Home Equity Funding” by Gaines and former Center research assistant Beth Thomas. It can be found online at http://recenter.tamu.edu/pdf/1939.pdf.

David S. Jones is the senior editor for the Real Estate Center at Texas A&M University.

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