Truth About Real Estate--Somebody has to say it!

Truth About Real Estate--Somebody has to say it!: It is Sunday, So I am Thinking on THIS!

2013-04-07T12:44:00.001-05:00

Truth About Real Estate--Somebody has to say it!: It is Sunday, So I am Thinking on THIS!: It is Sunday. That being said, I will tell you that I have had to think twice about how I am handling a situation which could blow up! ...

It is Sunday, So I am Thinking on THIS!

2013-04-07T12:43:00.002-05:00

It is Sunday. That being said, I will tell you that I have had to think twice about how I am handling a situation which could blow up! Right now, I refuse to get "down and dirty" but I must say I am a little annoyed. In case you haven't "figgered" this out, this blog is being written in the spirit of "blowing off steam!"
Ya know sometimes, it hard to see the truth but somebody has to say it and here I go again. . . .
Situation is: Buyer Carson is represented by me, an experienced ethical Realtor. I want it to be clear that my self description, in no way reflects poorly on the Seller's Realtor. She seems quite knowledgeable; I simply do not know her.
Here's the deal. Last night we came to a verbal agreement. My buyers accepted her seller's verbal counter offer. Today, before I receive written agreement, she tells me there is another offer. She and I both agree, it MUST be presented. Tough situation for her, agreed. I have requested that we be given the opportunity to match any other acceptable offer. She, probably wisely, did not acknowledge this request. Now I am stuck behind a keyboard with my mind wandering into Monday and just how I will handle a "turn down." Oops, as I tell my peeps "don't borrow trouble!"
Seriously, how should this be handled? I need input before I "output."

(Leave your message under anonymous but don't forget to sign your name)

Waking up without coffee

2013-03-27T11:53:00.001-05:00

One of the rituals of the American morning is coffee. People love it. Coffee makers come in all shapes and sizes. Some people search to find THE coffee makers that match their kitchen. They can be pre-set, they have alarm clocks and some will even brew just one perfect cup of the stuff that wakes them up and gets them moving.

Next to oil, coffee is the commodity that generates the most revenue worldwide. Entire industries have been built on this morning ritual. Starbuck’s corporatized the corner coffee shop, made it cool and built one of the biggest companies in the country. Coffee houses and chains sprang up after Starbuck’s initial success. In response, McDonald’s changed their coffee and started to offer gourmet coffees for the morning commute. And Dunkin’ Donuts, which sells more coffee in theU.S.than anyone, focuses its corporate advertising on the coffee, not the donuts.

Coffee, or more accurately, the caffeine in coffee, is addictive. It can also be expensive. If you find yourself with some of the symptoms of too much caffeine – jitters, heartburn or acid reflux, irritability, trouble sleeping, stack of coffeehouse receipts in your wallet – you might try these alternatives to the morning joe.

Take a cool shower

Not a COLD shower, a COOL shower. A cold shower can shock your system and there’s no sense in that. A cool shower will get the mind and body going. Try an invigorating body wash, too; something with peppermint in it.

Let there be light

Getting some light is a way to make your body realize that it’s time to get up. Getting outside in the sunshine is a great way to start the day; however, like many, you may be up before dawn. Just turn on the lights in the bedroom and the house. Dark is the enemy to waking up.

Listen to something

Set your alarm clock to your favorite radio station. Turn on the TV. Listen to an audiobook. Quiet is the enemy to waking up.

Get moving

Taking a brisk walk or jog around the neighborhood is a great way to start the day. Any exercise is beneficial. Take your dog for a walk. It benefits them just as much as it does you. Stretching, calisthenics, or yoga are also great ways to get moving in the morning.

Drink a glass of ice cold water

A glass of ice cold water, and we’re talking as cold as you can make it, will help wake you up as much as a cup of coffee will.

Don’t skip breakfast

Eating breakfast kick starts your metabolism. Make sure you get some protein and good carbohydrates. If you absolutely HATE eating breakfast, some people find that eating an apple is beneficial. The natural sugars in them give you energy. (And there is some truth to “An apple a day…”)

Try herbal tea

Hot teas may not be your bread and butter, but you probably didn’t LOVE coffee the first time you tried it, either. There are hundreds of different teas to try so you’re likely to find one that you like. Teas have great properties to help your health, too; many are high in antioxidants, which can help you fight certain types of cancer.

If you’ve tried to cut down on coffee, what’s your favorite way to start the day?

Why your down payment should be at least 20 percent

2013-03-26T11:53:00.001-05:00

If you’re like most people, you’re planning to have a mortgage in order to pay for your house. It’s almost unavoidable to buy a home without financing.

Conventional wisdom until a couple of decades ago was that a home buyer needed to save at least 20 percent to put down on a house. Recently, though, many people have gotten away from that rule of thumb. In order to promote home ownership, some programs require much less. There are some options that offer zero down.

Simple math

For the sake of this example, the home you’re buying is $200,000. The interest rate is 4 percent. Taxes are 1.5 percent. Private mortgage insurance (more on that later) is 0.5 percent.

Rates calculated using: zillow.com

Lower mortgage payments
Simple math dictates that the more you put down, the less your monthly payment will be. All things being equal, your mortgage payment drops $191 if you have 20 percent down as opposed to zero down. As a new homeowner, that will definitely help your monthly budget.

No mortgage-insurance fees
Private mortgage insurance (PMI) protects the lender in case you cannot pay the mortgage. PMI is required if your down payment is less than 20 percent in most cases. Your lender requires the fee be paid until you reach 20 percent equity in your home. Mortgage insurance can be expensive, ranging from 0.5 to 1 percent of the home's value annually.

Lower interest rate
With a larger down payment, you could qualify for lower interest rates, a fact not taken into account in the example above. Using the same example, if your interest rate dropped to 3.5 percent, your monthly mortgage payment would be $926.80 and the total interest payment would be $98,649.74. Compared to the 10 percent down payment in our example, you’d save $30,715 over the life of the loan in interest and PMI payments just by paying an extra $10,000 down.

Patience pays

As stated, the example above is simple math, but there’s nothing simple about mortgage math. Ask your REALTOR® and mortgage lender to crunch the numbers for you. Patience pays: taking the time to save money for a down payment offers solid return on investment. Over a 30-year mortgage, having a bigger down payment can save you tens of thousands of dollars on your starter home, helps you build equity faster and puts you on firmer financial footing.

Pre-qualified and pre-approved are not the same

2013-03-21T11:48:00.001-05:00

When you’re buying a home, there is a certain chronological order in the process. Arranging for a mortgage before finding the home you want to buy seems like it would be out of order, but it is to your advantage to take this step prior to making an offer.

There are two terms with which you should be familiar: pre-qualified and pre-approved. The two terms are often used interchangeably, but there is a difference.

What is pre-qualifying and why should you do it?

For pre-qualification, the mortgage professional reviews your finances, credit report and income to make an estimate of the amount for which you would qualify. After reviewing the information, the lender will issue a pre-approval certificate on company letterhead indicating that they have reviewed your finances and the amount of loan which you could qualify for.

Many lenders allow you to pre-qualify over the phone. This is good information to have, of course, because you’ll know the price range of the homes you should be looking for during your search. But remember this … it is not a guarantee of a loan. There still may be issues to resolve and the closing can take several weeks to complete.

Why pre-approval is better.

For a pre-approval, your loan application actually goes through the process of underwriting. The bank commits to lend you up to a certain amount, contingent upon the appraisal and the house qualifying for the loan.

There are two advantages associated with pre-approving for a home loan. First, it is a time saver. The closing process could be completed in one to two weeks when all you only need is an appraisal; while it can take between 30 and 45 days when you have to go through the entire loan process. Secondly, being pre-approved is attractive to sellers, particularly when they need to move quickly. If your offer is close to that of another potential buyer, being pre-approved may convince the seller to accept your offer.

If you have more questions about mortgage financing and shopping for a new home, please contact me. As your real estate professional, I am here to help with all of your home buying or selling needs.

Six Tips for First-Time Homebuyers

2013-03-15T15:08:00.001-05:00

A house is the biggest investment that most people will ever make. The decision to buy should not be taken lightly. Any time you buy a house it can be stressful, but buying one for the first time can be daunting. Here are a few tips to make your first-home purchase go more smoothly.

1: Determine your housing budget - Making sure that you can afford a house is the first step in the process. Fannie Mae recommends that buyers spend no more than 28 percent of their income on housing costs. Don't forget to add mortgage insurance, property taxes and homeowner's association fees. Use a mortgage calculator to determine what the approximate costs will be. Make sure to ask your real estate professional about taxes and fees.

2: Know your needs before you start looking - This requires a little self-analysis and planning. Think about what's important to you and your lifestyle. It's not really that difficult to determine whether you want to live in the country, suburbs or in the city. But if you don't want to be bothered with lawn and home maintenance, opt for a condo. If you're planning a family, you probably want a house with a lot of living space. Take a look at your employment situation, too. If there's a possibility of being transferred, you'll want to buy something that is likely to sell quickly.

3: Understand the additional costs of owning a home -There's more to consider than just a monthly mortgage payment. Your budget needs to include insurance, utilities, repairs, maintenance, lawn and landscaping.

4: Read the fine print -Everything is important in a contract, so read all the clauses and fine print before committing to a mortgage. Rates can vary greatly depending upon where you go and what programs are available, so don't be afraid to shop around for the best rate. The rate in the mortgage lender’s ad isn't always what you'll pay; lenders add points, private mortgage insurance and closing costs, which add to the cost of the mortgage. It never hurts to have a lawyer look at any contract.

5: Ask for full disclosure and a home inspection -Investing in a home inspection can save you money and stress in the long run.

While most states require the seller to disclose potential problems with the property, they may not always know about the homes entire history.

6: Understand the taxes -Make sure that you know if your property taxes are rolled into your monthly mortgage payment or if you will be responsible for paying them yearly. Don't forget that you can often deduct the property taxes, points and interest paid on a mortgage. Keep all paperwork for your annual federal or state income tax return. If you use an accountant to prepare your taxes, schedule a meeting to learn more about the these types of deductions.

If you have any questions about anything involved, during the home buying process, you can rely on the knowledge and experience of a real estate professional, like me.

Advantages and disadvantages of the short sale

2013-03-08T08:30:00.001-06:00

Over the past few years, the short sale has become a more common option for homeowners, who may be upside down in their mortgages. An alternative to foreclosure, the short sale involves homeowners making the decision to sell their property for less than what they owe on the mortgage.

This decision is a difficult one to be sure. If you find yourself in that situation, be sure to ask your real estate agent about the advantages and disadvantages of a short sale. Before making this decision, you should understand what the long-term effects of a short sale may be.

Advantages

The most obvious advantage to a short sale is that it may help your credit rating by preventing a foreclosure from appearing on your credit report.

Because the mortgage lender will be compensated for the home, they are more likely to approve a short sale rather than going through the expense of a foreclosure. Short sale homes typically sell for more than a foreclosure, offering another advantage to the lender.

Opting for a short sale may allow you a bit more time to make future living arrangements. With a foreclosure, you’ll get about 30 days to vacate; you may get 90 days or more in a short sale situation.

Disadvantages

While a short sale doesn’t appear as a foreclosure on your credit report, it will appear as a closed account, which can lower your credit rating by as much as 150 points, making it more difficult to purchase a home in the immediate future. By comparison, a foreclosure on your credit report can prevent you from qualifying for a home loan for seven years or more.

You will have to move out of your home and seek new housing - with a short sale on your credit report.

Depending on regulations in your state, the lender may require a deficiency note, which requires you to repay the amount still owed on the mortgage after the sale. This debt will almost always go on your credit report if not repaid.

There are also some tax implications to a short sale; the amount of the debt that is cancelled may be taxed.

Be sure to talk to your mortgage lender and your REALTOR about short sale options. These professionals can help you make the best decisions possible when it comes to selling your home, reestablishing your credit, and getting back on the road to homeownership as soon as possible.

CFPB Releases New Mortgage Rulings

2013-02-25T13:44:00.001-06:00

The Consumer Financial Protection Bureau (CFPB) has recently issued new Mortgage rules. These rules cover a lot of territory, but the part of the 804 page document discussing changes to borrower affordability is generating the most attention.
The focus on affordability is due to the recent housing bubble – or the period of self-reinforcing increase in home prices. This led to poorly enforced rules that allowed lenders to award loans to individuals who were unable to afford them leading to a burst in early 2007.

In response to the real estate bust and credit crisis led to the Dodd-Frank bill passing into law in 2010 some see this law as a knee jerk response that ordered the CFPB to define “qualified mortgages” or mortgages that lenders can award with minimal risk and these rules are to go into effect on Jan 10 2014.

These new rules have declared that qualified loans can no longer include any of the following::
·      interest-only;
·      balloon payment;
·      negative amortization;
·      term exceeding 30 years;
·      zero documentation;
·    lender fees exceeding 3 percent of the loan amount (unless that amount is less than $100,000); or low "teaser" rate on an adjustable-rate mortgage (ARM)

There are few loans being issued today that include any of these listed loan options and these new rules should help alleviate some of the excessive stringency in the current market.

Moving Day Meals

2013-02-15T15:14:00.001-06:00

We all know that moving day is a challenge with planning, logistics and the physical (and emotional) strain. Planning meals is one thing that may slip through the cracks.

Finding their way

Be sure to identify restaurants in the area. This is particularly helpful if you’re moving across country. Useful apps like yelp.com and urban spoon can make this easy. While you’re at it, look up the address of a local grocery store.

Open first box

You’ll want to pack a “first opened” box. It does not get packed into a moving van and is the first one moved to the kitchen where it is easy to find. Inside will be the essentials: first aid kit, medications, toiletries, trash bags and the items necessary to make the first meal in your new home. Don’t forget that utensils and plates to serve the first meal should be added to this box.

Keep it simple

The first meal at a new home should be easy to make and served without a lot of hassle. One of the easiest things to make is pasta. Sauce in the jar doesn’t have to be refrigerated. Dry pasta is easy to transport and store. The best thing is that it can be made in one pan.

For lunch or for summer days, you might suggest making sandwiches or hoagies, which do require a quick trip to the grocery store.

Having the first meal in the new home is one of the best ways to transition to a new area. Having a planned meal, with all the essentials to make and serve it, will help to ease the stress.

Housing Market Rebound Stays Steady

2013-02-07T10:53:00.001-06:00

Across the housing industry, the cautious consensus seems to be that the market rebound is steadily moving forward.

Market is 52% back to “normal”

Jed Kolko, Trulia’s Chief Economist, blogs on The Huffington Post.

This month Kolko posted about Trulia’s Housing Barometer, which looks at three indicators — construction starts, existing home sales and the delinquency-plus-foreclosure rate — and compares them to both their worst level and to their pre-bubble “normal” levels.

The December 2012 barometer indicated positive signs:

Construction starts were at a 54-month high, the highest since June 2008 — putting construction starts 47% back to normal

Existing home sales were down slightly — dropping about 1% from the previous month, existing home sales were still at their second-highest level since November 2009 and if distressed sales were left out, home sales were up 26% year-over-year in December

Delinquency + foreclosure rate was steady — just barely down from the previous month, December’s rate of mortgages that were delinquent or in foreclosure is the lowest it’s been in four years, and 41% back to normal

Taken together, these three indicators show a market that is 52% back to normal — compared to just 27% back to normal in December 2011.

(Read Jed Kolko’s complete article on The Huffington Post, here)

Home prices increase is the biggest in 6 1/2 years

According to CoreLogic, U.S. home prices rose 7.4% in November 2012 — the largest annual percent increase in six and a half years. Rising home prices are considered to be key to the housing market recovery. CoreLogic is forecasting home prices to continue to rise in 2013 by another six percent.

(via Investors.com)

Lead with your head

Even as many indicators — including data for housing starts and permits and the National Association of Home Builders/Wells Fargo Index of traffic of prospective buyers — show the housing market is recovering, experts recommend that home buyers and sellers make strategic rather than speculative decisions.

Robert Shiller, professor of economics and finance at Yale and one of the economists behind the S&P/Case-Shiller Home Price Index, wrote the following last week in The New York Times,

The bottom line for potential home buyers or sellers is probably this: Don’t do anything dramatic or difficult. There is too much uncertainty to justify any aggressive speculative moves right now. If you have personal reasons for getting into or out of the housing market, go ahead. Otherwise, don’t stay up worrying about home prices any more than you do about stock prices.

(Read Shiller’s full article on The New York Times, here)

3 Tips On How You Can Lower Your Closing Costs

2013-01-29T15:45:00.001-06:00

1. New Mortgage Disclosure Form

There’s a new form going into effect in the next few months that’s intended to be easier to understand as well as to make sure that every cost related to taking out a new mortgage or buying a home is clearly laid out.

The new form for closing services is called the “Loan Estimate” and separates your closing cost fees into three simple categories: Origination Charges, Services You Cannot Shop For, and Services You Can Shop For, which will allow you to comparison shop for certain mortgage-related services.

2. Shop Around

By understanding your closing costs (made significantly easier and more transparent thanks to the new mortgage form rolling out this year), you can comparison shop certain services such as title insurance and settlement fees and possibly save yourself thousands of dollars.

3. Negotiate with the seller

Sometimes a seller gets stuck on the selling price for their home — and they won’t take a penny less. If it’s still more than you want to pay, it’s possible that the seller may be open to paying the closing costs on the transaction. Psychologically, they feel they are still getting the price they set for their home, while the amount you will actually be spending will be less. Remember the cost of your new home is more than just the sticker price, it’s that amount plus all the associated fees and charges.

For more tips on getting the best deal on your mortgage, check out these sources:

Housing prices negotiations stalled? Why closing costs are your best bargaining chip (CS Monitor)

Mortgage Closing Costs You Can Negotiate Lower (Lender 411)

Five Tips to Keep Your Mortgage Refinancing Closing Costs Low (Total Mortgage)

Phew, Short Sales Didn’t Go Over the Cliff

2013-01-17T15:56:00.001-06:00

Debt forgiveness act extended through 2013

As negotiations waged in Washington, D.C. regarding how to avoid the looming “fiscal cliff,” it was unclear until nearly the last minute whether the Administration was going to extend the Mortgage Debt Forgiveness Act of 2007 through 2013.

The statute was enacted in 2007 and means that homeowners who sell their home at a loss — e.g., in a short sale — are not taxed on the amount of their mortgage not repaid (up to $2 million). The statute was set to expire on the last day of 2012 and it was announced in the early days of the new year that it had been extended.

May save underwater sellers $1.3 billion

Short sales were up year over year in the second quarter of 2012 by 12 percent and in the third quarter by 22 percent according to RealtyTrac. The combination of banks not only smoothing the short sale process but also approving more short sales, along with the not inconsiderable financial advantage of not paying taxes on the forgiven debt, proved distinctly appealing to many homeowners with underwater mortgages.

The Congressional Budget Office estimates that extending the Mortgage Debt Forgiveness Act through 2013 could save taxpayers $1.3 billion.

Via RealtyTrac, TotalMortgage, National Association of Attorneys General, and Huffington Post.

The "Grind"

2013-01-13T16:36:00.002-06:00

Well, it has been awhile, but I am back at the "grind." Did I ever mention, I really do enjoy the "grind" most days? I finally figured out, or maybe just read somewhere, that the difference in a bad day and a good day is just your attitude!
As many of you know, I do sell real estate full time but recently found myself the caretaker for my 83 year old dad, recovering from a broken ankle. Those days are behind us but I have to tell you, although I love this man, he is not the same man that raised me. My dad was in many ways, the class bully, the good-looking 17 year old with fast car, a strict dad and above all, a proud MARINE! Many early mornings my siblings and I were awakened to his humming version of the Marine Corp Hymn. Poor dad, he could never sing, or even hum, for that matter What I am attempting to tell you is that he was a strong personality with a lot of pride. Now 50 something years later, that picture has changed. Dementia has set in and that pride, has taken a back seat to his daily needs. Somewhere in that magical space we call a mind, my dad lives in a world of his own. Luckily, he has trips back to reality and I feel encouraged for those moments and those conversations. I am grateful for all the time, but particularly "real time." Just yesterday I received an email of encouragement from a dear friend. In this note, the friend confided a family history of dememtia. That family history has left her with the fear that it could possibly invade her life someday. That got me thinking (and that is dangerous)!
In 1985, my dad retired from the high pressure world of oil and gas. His "retirement" job was to be a sheep farmer/rancher/herder! For about 10 years he did the farm thing quite successfully. One day he abruptly announced he was through, and sold everything, but the farm which he leased. With all the crop and stock gone, dad begun to lay around. Once he sat in the recliner, he was finished. Quickly, he began to lose names and faces, and details no longer mattered. Finally, he is merely a shell of the man who raised me.
All emotions aside, I must tell you that the last thing my dad has taught me, to date, is to never quit. Whether quitting, hastened his dementia, we will never know for sure. I can tell you, I believe it did. I vow to stick with the daily grind as long as I am capable! Yes, it sometimes is a grind, and it does happen daily, but keeping your mind alert and on task is vital! Real Estate is definitely a business where the mind is stretched and pulled. I am grateful to have been led into such a vocation.
Life is good and it just keeps getting "gooder" right here in Norman, OK!

2012 Ends On A Record Breaking Note

2013-01-04T16:03:00.001-06:00

4 of The Most Expensive Properties Sold In 2012 As experts predict that 2013 will see the over-all housing market continue its slow and relatively rational recovery, a look back at 2012 reveals that for some buyers, slow and rational have nothing to do with their home buying decisions.

$132 million for a ranch in Montana

Stan Kroenke, owner of, among other things, the St. Louis Rams, the Denver Nuggets and the Colorado Avalanche is reported to have dropped well over $100 million on 124,000 acres out west in December of 2012. The addition of the Broken O Ranch brings Kroenke’s total U.S. real estate portfolio to more than 850,000 acres. More information about the ranch can be found on the Bates Land Company’s website, here.

$90 million for a penthouse in ONE57 in New York City

Selling for nearly $5,000 per square foot less than Sandy Weill’s penthouse in 15 CPW (see below), the buyers of this 10,923-square-foot penthouse on the 89th and 90th floors of the towering condominium complex — of dangling crane fame — still managed to set the record for the largest single family real estate transaction in the Big Apple.

$88 million for a penthouse at 15 CPW in New York City

In February a Russian billionaire plunked down almost $90 million for 6,744 square feet for his daughter. While it was still owned by Sandy Weill (former CEO of Citigroup), the apartment was featured in Architectural Digest — see the spread here. That one sale lifted the average price of a home in Manhattan for the first two months of 2012 by more than 20 percent and set the record for the most spent per square foot for a home anywhere in the U.S.A.

$85 million for Aaron Spelling’s former home

At 56,500 square feet, Aaron Spelling’s home was the largest single family residence in America when it was built in 1988. After being on the market for two years, British billionaire and Formula One founder Bernie Ecclestone knocked $65 million off the asking price and snapped it up for his daughter, Petra. For more photos, check out this feature on People.com.

2013 Is Looking Good For the Housing Market

2012-12-28T15:48:00.003-06:00

All Signs Point To Continuing Recovery

Lower inventory = higher prices

US News reports that the “supply of homes for sale across the nation has fallen 43 percent,” allowing sellers to raise prices and causing bidding wars among buyers. With pricing corrections underway, home inventories will need to expand again in 2013 to support the continuing recovery.
In Trulia’s “Housing in 2013: What’s In, What’s Out,” worry over home prices finding a bottom is so 2012 — in 2013, the hot topic is when will housing inventories bottom out?

Reparation replaced with prevention

If 2012 was the year of fixing what went wrong with the mortgage industry, 2013 is anticipated to be the year of implementing policy to ensure it never happens again. New mortgage rules are to be announced by the Consumer Financial Protection Bureau in January that are intended to motivate lenders to expand mortgage credit, while preventing a recurrence of the abundance of high-risk loans that precipitated the housing market crisis. Expanded credit is needed to expand the pool of hopeful buyers who qualify for mortgages.

Housing affordability begins to shrink

The record low mortgage rates along with depressed home prices contributed to housing affordability being near all time highs. With 2013 expected to see mortgage rates rise, housing inventory levels drop and home prices increase, housing affordability next year may be a shrinking opportunity.
For more predictions about the housing market in 2013, check out these resources:

US News — Top 5 Predictions for the Housing Market in 2013
Trulia — Housing in 2013: What’s In, What’s Out
Housing Wire — What real estate trends suggest for 2013

Why Your Mortgage Interest Deduction May Go Off the Cliff

2012-12-20T15:02:00.002-06:00

Congress Contemplates Making Changes To Major Homeowner Benefit

Happy Centennial to mortgage interest deduction!

Nearly 100 years ago, in 1913, Congress amended the Constitution to allow for the country’s first income tax — and agreed to make all interest payments deductible from this new obligation. A few decades later as the country began to emerge from the Great Depression and the Second World War, more and more Americans were buying homes and the tax deductibility of mortgage interest payments became a significant element of promoting home ownership.

Mortgage interest deduction costs $100 billion a year

As the “fiscal cliff” and huge budget deficit hang heavy on the minds and desks of policymakers in Washington, the mortgage interest deduction is thought to be close to the top of the list of possible solutions to reducing the deficit. The mortgage deduction is both “one of the most cherished in the U.S. tax code… and on eof the most expensive, estimated to cost the federal government $100 billion this fiscal year.” (Los Angeles Times)

Likely to be “adjusted” but not “eliminated”

Experts agree that it is unlikely that a wholesale elimination of the mortgage interest deduction will be approved. It is more likely that the code will be refined to reduce the benefit for high-income households and borrowers. The president of the National Association of Realtors (NAR), Gary Thomas, commented that it has always been the N.A.R.’s position that the mortgage interest deduction is vital to the stability of the American housing market and economy, and we will remain vigilant in opposing any future plan that modifies or excludes the deductibility of mortgage interest.” (The New York Times)

Changing the deduction has bi-partisan support

In a time when there seems to be little upon which Democrats and Republicans can agree, changing the mortgage interest tax deduction seems to be striking the right bi-partisan note. Both President Obama and the former Republican presidential nominee, Mitt Romney, have come out in support of capping the deduction.

Via The American Prospect, The Los Angeles Times, The New York Times.

Short Sales Are On The Rise

2012-12-12T15:46:00.002-06:00

According to recent study by the online marketing company, RealtyTrac, short sales have been on the rise.
These homeowners are motivated to sell in a short sale because the closing price is less than what they owe the bank. The bank agrees to absorb the loss, and unloads the property while the homeowner gets out of a mortgage they can't afford.
Currently, homeowners don't have to pay federal tax on the unpaid mortgage debt because of a bailout-era law known as the Federal Mortgage Debt Forgiveness Act.
However, this act expires on December 31 and unless it is extended, in January the IRS will start treating unpaid mortgage debt as taxable income for many borrowers. The average amount of forgiven debt in a short sale is about $95,000, according to Blomquist. The tax on that amount could go as high as $33,250, even more if the Bush tax cuts expire.

FHA Upcoming Policy Changes

2012-11-26T15:25:00.001-06:00

The FHA plans to accelerate its recovery

In the same report, issued by the Housing Administration last week, that showed a negative economic value for its capital reserve fund for the first time in its history last week, the FHA outlined an “Action Plan” to strengthen the fund and speed its economic recovery in the next few years.

The FHA projects that, if no policy changes or other operating changes were to be made, its fund will be positive in 2014 and reach the mandated ratio of 2.0 percent by 2017. With new policies and programs in place, the FHA is expecting the fund will be positive within the year and reach the mandated capital reserve ration by 2014.

Upcoming policy changes outlined by the FHA

Strengthen assistance programs for delinquent homeowners — the FHA is aiming for payment reductions of at least 20% for FHA-HAMP modifications
Streamline FHA short-sale process — and reduce the number of traditional FHA REO foreclosures, which are significantly more costly
Change the FHA premium cancellation policy — premiums will be required to be paid for the life of the loan, a change from the current policy which allows homeowners to let the policy lapse after the home had achieved 22% equity
Increase the mortgage insurance premium by 0.1 percent
Accelerate asset disposal programs to sell up to 10,000 distressed mortgages each quarter
Revise the HECM (reverse mortgage) program to lessen its negative impact on the fund — projected changes include reducing the initial amount borrowers are allowed to draw at loan orgination and reducing the maximum amount of funds available to the borrower throughout the program

Read the FHA’s full report here.

FHAs Annual Report Is In

2012-11-19T15:40:00.001-06:00

Reserve Fund Is Low — Will the Treasury Need To Help?

Negative capital reserve does NOT indicate operating deficit

The U.S. Department of Housing issued its Annual Report to Congress on the financial status of the Federal Housing Administration’s Mutual Mortgage Insurance (MMI) Fund for the fiscal year 2012 last week. Most notably, the report reveals that the fund currently has a negative economic value of $16.3 billion.

It is important to note that the fund’s negative value does not mean that the FHA is unable to pay insurance claims or is running a current operating budget.

FHA unlikely to petition Treasury support

Although the FHA could petition for a Treasury draw, the decision as to whether that’s necessary doesn’t rest on the projections outlined in the report, but on the President’s budget proposal, which will be released in February — even then, the final determination won’t be made until September of next year. The report’s estimate of this year’s deficit also does not include $11 billion of expected capital accumulation from the FHA’s current “book of business.”

The FHA, which was created in 1934 to revive the country’s housing market after the Great Depression, has never had to call upon the Treasury for financial support.

Capital reserve fund down from 2011

The Congress mandates that the FHA’s capital reserve fund be no less than 2 percent of the FHA’s “insurance-in-force” — with $1.13 trillion of insurance-in-force for FY 2012, the current capital reserve fund ratio is about -1.44 percent, down from 0.24 percent in 2011 (when the fund had an economic value of $2.6 billion).

Fund predicted to be in the black within 2 years or less

The FHA predicts that — without any policy changes or other operating changes that might impact the FHA’s recovery — the fund will be positive in 2014 and reach the mandated ratio of 2.2 percent by 2017.

Read the FHA’s full report here.

New Mortgage Applications Up, ReFi’s Down

2012-11-12T12:32:00.001-06:00

Mortgage Rates Stay Fairly Steady (And Low)

Refi applications drop 4 weeks in a row

The last week in October saw a 6 percent drop in refi applications from the prior week, marking the fourth straight week of decreases. Interestingly, just a month earlier, in September, refinance applications reached their highest level in three years.

Mortgage rates continue to hover near all-time lows

Mortgage rates have been holding fairly steady at nearly record lows, which may partly explain the drop in applications for refinancing. As a senior economist at Wells Fargo Securities put it, “People who are not underwater have already refinanced. People who want to refinance but couldn’t are already underwater.” (via Medill Reports)

Refinancing activity drop predicted to continue next year

At the Mortgage Bankers Association’s annual convention earlier this month, consensus seemed to be that mortgage originations would go up next year, but refinancing would drop in the second part of the year.

New Home Sales Continue to Rise

2012-11-06T16:24:00.001-06:00

Highest Sales Level In More Than 2 Years

Month to month improvement nearly 6%

The Census Bureau reports that sales of new single-family homes rose 5.7 percent from August 2012 to September. The seasonally adjusted annual rate in September was 389,000 — up from August’s 368,000. The new home sales rate in July of this year was 374,000 — a two-year high.

Annual increase more than 25%

September 2012 saw a 27.1 percent increase in new home sales over September of last year. The median sales price of a new home in September was $242,000 — up nearly 12 percent over the same time last year.

Housing market recovery seems solid

Bloomberg interviewed an economist with RBS Securities in Connecticut who said that

“All the things that were really holding back housing are finally starting to lift. It really is tough to find any bad signs here. Inventories are very, very lean. Assuming the economy remains on track, housing should continue to improve for the rest of the year and into 2013.”

Gathered from

· Home Sales Rising to Two-Year High Spur U.S. Growth: Economy (Bloomberg)

· New-home sales up 27 percent from a year ago (Inman News)

· New home sales jump to two-year high (NBC Bottomline)

Mortgage Rates Expected To Creep Higher

2012-10-29T15:31:00.001-05:00

Record Low Rates May Be Behind Us

Mortgage applications slow as rates rise

Mortgage applications fell in mid-October to their lowest level since August. At the same time, Zillow’s Mortgage Marketplace reported a slight increase in the rate for a 30-year fixed mortgage — up 2 basis points from 3.26 percent to 3.28 percent.

MBA sees Fed policy supporting slow rise in rates

The Mortgage Bankers Association (MBA) is predicting an average rate of 3.8 percent for 30-year fixed mortgages in the fourth quarter, rising to 3.9 percent in the first quarter of 2013 — with a steady, slow rise to land around 4.4 percent by the fourth quarter of 2013. Jay Brinkmann, the MBA’s chief economist, thinks “continuing purchases of mortgage-backed securities through the Federal Reserve’s QE3 program will likely keep the 30-year fixed-rate mortgage below 4% through the middle of 2013.”

International economy impacted rates more than expected

According to Brinkmann, factors economists normally expect to drive interest rates, such as inflation, were less significant than other factors —

“it was uncertainty in European economies and actions taken by the Federal Reserve that moved rates so low this year.”

Gathered from

Foreclosures Hit a 5-Year Low

2012-10-22T08:30:00.001-05:00

Filings Down 16% Year-Over-Year

Lowest foreclosure activity level since 2007

RealtyTrac recently reported that September’s foreclosure filings (just over 180,000) were the fewest monthly filings recorded since July 2007.

Month to month

Total foreclosure filings fell 7 percent from August 2012 to September 2012 — the second consecutive month of declining filings.

Foreclosure starts also down

Foreclosure starts (homes entering the foreclosure process) dropped from the prior month by 12 percent and from September of 2011 by 15 percent. August 2012 was also down from the previous month, the first drop in monthly foreclosure starts after three consecutive months of increases.

State by state, the news is either very good or very bad

The national decrease in foreclosure activity was driven mainly by declining activity in the non-judicial states (states where foreclosure proceedings do not go through the courts). Nevada, Oregon and Utah — all non-judicial states — saw foreclosure activity rate drops of more than 60 percent. Of the 24 non-judicial states, 20 saw a decline in foreclosure activity.

Judicial states, however, are not faring as well. In 14 of the 26 judicial states, foreclosure activity increased year-over-year. New Jersey saw a 130 percent increase in activity in the third quarter, New York experienced a 53 percent increase, and activity in Pennsylvania, Connecticut and Illinois jumped 31 to 36 percent.

For more on recent foreclosure activity, read RealtyTrac’s complete report here.

6 Straight Months of Rising Home Prices

2012-10-19T09:34:00.001-05:00

Year-Over-Year Home Prices Continue To Improve

Prices increasing both year-over-year and month-over-month

CoreLogic — one of the largest real estate data sources in the country — posted its latest Home Price Index Report recently, showing a 4.6 percent rise in national home prices from August 2011 to August 2012. That’s the largest annual increase in home prices in more than six years. From July, August home prices showed a 0.3 percent increase.

Biggest price gains are in Arizona, Idaho and Utah

CoreLogic analyzes the data both including and excluding “distressed sales,” which it defines as “short sales and real estate owned (REO) transactions.” Arizona, Idaho and Utah were all in the top five states in annual home price appreciation, both with and without distressed sales.

· Arizona tops the list of largest price gain both with and without distressed sales — showing an 18.2% increase in price across all sales and a 13% price increase when distressed sales are excluded.

· Utah home prices went up 8.9% across the board and 10% when distressed sales are excluded

· Idaho saw home prices increase 10.4% annually when looking at all sales, and 8.6% when distressed sales were excluded

States with falling prices include Rhode Island, New Jersey and Alabama

When distressed sales were factored out of the analysis, only three states posted a drop in home prices from August 2011 to August 2012 — Rhode Island, New Jersey and Alabama.

· Rhode Island home prices decreased 1.7% excluding distressed sales — when distressed sales are included, RI home prices showed an annual 2.6% drop

· New Jersey saw a 1.4% drop in annual prices both with and without including distressed sales

· Alabama showed home prices falling just 0.2% if distressed sales are factored out — even including distressed sales, at 0.7% Alabama showed almost the smallest drop in home prices in the country

Continued home price gains in September

According to the report, CoreLogic is predicting a seventh month of annual home price increases in September of 5 percent, albeit with a small drop month-to-month from August of 0.3 percent:

The CoreLogic Pending HPI indicates that September 2012 home prices, including distressed sales, are expected to rise by 5 percent on a year-over-year basis from September 2011 and fall by 0.3 percent on a month-over-month basis from August 2012 as the summer buying season closes out. Excluding distressed sales, September 2012 house prices are poised to rise 6.3 percent year-over-year from September 2011 and by 0.6 percent month-over-month from August 2012.

For the complete CoreLogic Home Price Index Report, click here (PDF).

How You Can Get The Most From Your Homeowners

2012-10-18T09:12:00.002-05:00

Part 1: Be Prepared Not Surprised When Disaster (or Damage) Strikes

1. Review Your Policy Every Year

Life changes and market changes can impact your home insurance policy — everything from having a baby to declining property values may mean the insurance policy you have in place should be adjusted.
Kiplinger’s 10 Reasons Your Insurance May Need A Checkup goes through items including

Have you gotten married or divorced?
Have you acquired any new valuables such as jewelry, electronic equipment, fine art, antiques?
Did your teenager get a driver’s license?

New or changed circumstances can mean you should make changes to your policy — reviewing your policy at least once a year will help prevent unpleasant surprises.

2. Understand When You’re Covered and When You’re Not

As The Nest puts it “Insurance pays for sudden, accidental events, not for gradual decline and aging.” If a tree falls on your roof, repairing or replacing the roof should be covered by your policy. If, however, your roof starts leaking after 10 years due to age or general wear and tear, standard home insurance policies won’t cover the cost.
Keep in mind, too, that “wear and tear” vs “natural causes/disasters” can be differently addressed by different insurers and in different parts of the country. Policies in hurricane prone areas such as Texas and Florida generally do not cover roof damage that is caused during a storm.
If you live in a flood prone area (either living near the coast or large body of water or in a hurricane zone), be aware that homeowners insurance doesn’t extend to property damage caused by floods. In fact, the Insurance Information Institute estimates that only about 12 percent of homes in flood prone areas have flood coverage. You can obtain flood insurance through the National Flood Insurance Progam. Earthquake damage also requires a separate policy.

3. Make Sure Your Policy Matches Your Needs

Your homeowners insurance policy should be tailored to your life and your home — if you’re not concerned with finding a temporary place to live while repairs are underway, make sure you’re not paying for “displacement coverage,” which provides reimbursement for living costs while you are out of your home.
Confirm whether your policy covers “replacement costs” or “actual cash value.” If you are covered for the “cash value” of an item, its value will be based on the value the item would have had — that is, if your ten year old stereo system is stolen, you will be reimbursed the amount that old stereo would cost. If you’re covered with “replacement cost,” however, your policy should pay to replace that stereo with a comparable brand new one. It’s a good idea to make and maintain a household inventory of the contents of your home (with receipts if you have them), including your clothes and jewelry.
There are online tools that will help you determine replacement costs for your home for less than $10:

AccuCoverage walks you through a detailed questionnaire to prepare a fairly specific report outlining the costs of replacing your home
HomeSmartReports offers a quick review and then provides high and low estimates for replacing your home, but doesn’t allow for custom features

Homeowners insurance resources

Home Insurance Basics (insure.com)
What does a standard home insurance policy cover? (homeinsurance.com)
How Do You Get Your Homeowners Insurance to Pay for Your Leaking Roof? and 5 Important Elements in Any Homeowner's Insurance Coverage (TheNest.com)
Hurricanes and Flood Insurance: What Homeowners Should Know (nolo.com)
Breaking Down Homeowner’s Insurance Coverage (moneycrashers.com)

Next Week, Part 2: Saving Money While Keeping Your Home Protected