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Sunday, August 30, 2009
Watch this hilarious outtake of how NOT to sell a home.
Tuesday, July 21, 2009
Interest Rates & Mumbo- Jumbo
After hitting record lows this spring interest rates are slowly starting to edge back up. The newspapers, television and radio all report very seriously about “10 year treasury” this and “long term government debt” that, but what does that all mean to you and me?
Banking bigwigs are worried that rising interest rates could push house prices lower and hurt profits, signaling a rise in inflation and increased borrowing costs slowing home financing activity. That’s hard to decipher. Here’s another sample of interest rate jargon: “The volume of mortgage applications filed this season dropped a seasonally adjusted 18.9%, as refinancing activity has plunged, Meanwhile, the week-to-week pace of applications filed for mortgages to purchase homes was down a seasonally adjusted 4.5%.”
It’s almost like they don’t want us to understand how the interest that you and I pay everyday are calculated. While it’s not something we may think about often, interest rates affect a large part of our lives. Those rates revolve around The Fed, or Federal Reserve System, which was created by the US Government in 1913 to govern the banking industry and it is charged with maintaining the nation’s financial system. When the economy is growing quicker than what the Fed wants, and there is a threat of inflation, the Fed will usually raise interest rates. Then, when the economy cools and there’s the risk of a recession or, God forbid, a depression, the Fed will lower the interest rates in an attempt to spur growth.
When the rates are increased, the banks pay more for the money they borrow. That means they charge you more money when they loan you money. Again, the other side is that when the costs to the bank drop, so will the costs to you.
So, has the recent rise in rates put us off investing in real estate? Yes.
Should it have? No.
While you might be concerned by the recent rise, let’s be honest: interest rates are still pretty good — we’re just comparing them to the bargain bin rates of spring. We’ve enjoyed basement-level interest for a while but if you still feel you’re at the mercy of rising rates, you do have options to keep those rates and payments low, and you might be able to help yourself to some savings.
First, don’t panic. Mortgages are notoriously fickle. While it’s true that interest rates rise much more quickly than they fall, even a sharp jump in one day or week can be erased over the next week or two, and since most early mortgage payments are tax-deductible interest, you’ll recoup some of that on April 15. And remember that house prices are still the best they have been in years.
Next, do your homework. Research banks who offer the best rates and mortgage brokers who you might be able to negotiate with, but don’t get pushed around by lenders who want to offer you more than you can afford. Keep your housing expenses below 35% of your total income.
Then, think ahead. Hunt down those tax credits and remember that your credit score matters. A score below the mid 700’s could lead to higher rates or denials, so work to improve it by paying bills on time and lowering your debts.
And save for that down payment, the more the better, and if you can put down over 20% you can make a big savings on your private mortgage insurance payments.
And finally, be comforted. Rising interest rates are actually often a harbinger of good things to come. Yes, an uptick in interest costs can slow a galloping economy. But in slower times, like we are in now, higher interest rates usually signal better economic times ahead, not worse.
Interest rates are up, signaling better times ahead, but not so much that you can’t still get a good deal out there, so if you can manage your income, manage your debt and your credit profile is good, this could be a great time to hop off the fence and into a home.
Wednesday, May 27, 2009
Confidence Anyone?
Consumer Confidence Index Increases to Highest Level in Eight Months
RISMEDIA, May 27, 2009-The Conference Board Consumer Confidence Index, which had improved considerably in April, posted another large gain in May. The Index now stands at 54.9 (1985=100), up from 40.8 in April. The Present Situation Index increased to 28.9 from 25.5 last month. The Expectations Index rose to 72.3 from 51.0 in April. The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by TNS- one of the world’s largest custom research companies. The cutoff date for May’s preliminary results was May 19th.
Says Lynn Franco, Director of The Conference Board Consumer Research Center stated: “After two months of significant improvements, the Consumer Confidence Index is now at its highest level in eight months (Sept. 2008, 61.4).
Continued gains in the Present Situation Index indicate that current conditions have moderately improved, and growth in the second quarter is likely to be less negative than in the first. Looking ahead, consumers are considerably less pessimistic than they were earlier this year, and expectations are that business conditions, the labor market and incomes will improve in the coming months. While confidence is still weak by historical standards, as far as consumers are concerned, the worst is now behind us.”
Consumers’ overall assessment of current-day conditions improved again. Those claiming business conditions are “good” increased to 8.7% from 7.9%. However, those claiming conditions are “bad” increased to 45.3% from 44.9%. Consumers’ appraisal of the job market was also more favorable. Those claiming jobs are “hard to get” decreased to 44.7% from 46.6% in April, and those saying jobs are “plentiful” edged up to 5.7% from 4.9%.
Consumers’ short-term outlook improved significantly in May. Those expecting business conditions will improve over the next six months increased to 23.1% from 15.7%, while those anticipating conditions will worsen declined to 17.8% from 24.4% in April.
The employment outlook was also less pessimistic. The percentage of consumers expecting more jobs in the months ahead increased to 20.0% from 14.2%, while those anticipating fewer jobs decreased to 25.2% from 32.5%. The proportion of consumers anticipating an increase in their incomes edged up to 10.2% from 8.3%.
For more information, visit www.conference-board.org.
RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.
For more real estate headlines on RISMedia.com, see:
RISMEDIA, May 27, 2009-The Conference Board Consumer Confidence Index, which had improved considerably in April, posted another large gain in May. The Index now stands at 54.9 (1985=100), up from 40.8 in April. The Present Situation Index increased to 28.9 from 25.5 last month. The Expectations Index rose to 72.3 from 51.0 in April. The Consumer Confidence Survey is based on a representative sample of 5,000 U.S. households. The monthly survey is conducted for The Conference Board by TNS- one of the world’s largest custom research companies. The cutoff date for May’s preliminary results was May 19th.
Says Lynn Franco, Director of The Conference Board Consumer Research Center stated: “After two months of significant improvements, the Consumer Confidence Index is now at its highest level in eight months (Sept. 2008, 61.4).
Continued gains in the Present Situation Index indicate that current conditions have moderately improved, and growth in the second quarter is likely to be less negative than in the first. Looking ahead, consumers are considerably less pessimistic than they were earlier this year, and expectations are that business conditions, the labor market and incomes will improve in the coming months. While confidence is still weak by historical standards, as far as consumers are concerned, the worst is now behind us.”
Consumers’ overall assessment of current-day conditions improved again. Those claiming business conditions are “good” increased to 8.7% from 7.9%. However, those claiming conditions are “bad” increased to 45.3% from 44.9%. Consumers’ appraisal of the job market was also more favorable. Those claiming jobs are “hard to get” decreased to 44.7% from 46.6% in April, and those saying jobs are “plentiful” edged up to 5.7% from 4.9%.
Consumers’ short-term outlook improved significantly in May. Those expecting business conditions will improve over the next six months increased to 23.1% from 15.7%, while those anticipating conditions will worsen declined to 17.8% from 24.4% in April.
The employment outlook was also less pessimistic. The percentage of consumers expecting more jobs in the months ahead increased to 20.0% from 14.2%, while those anticipating fewer jobs decreased to 25.2% from 32.5%. The proportion of consumers anticipating an increase in their incomes edged up to 10.2% from 8.3%.
For more information, visit www.conference-board.org.
RISMedia welcomes your questions and comments. Send your e-mail to: realestatemagazinefeedback@rismedia.com.
For more real estate headlines on RISMedia.com, see:
Sunday, May 3, 2009
10 New Tax Breaks for Homeowners
Smart ways to lower Uncle Sam's bill
By Matt Woolsey
Forbes.com
Congress' inclusion of home energy incentives in the $787 billion stimulus plan it passed in February has a steady stream of customers heading to Manhattan's Green Depot, a nationwide chain that carries environmentally friendly and sustainable housewares such as LED light bulbs and cork flooring. Most popular? Solar products, says Brian Tereza, the store's general manager.
That could be because as part of the plan, buyers of solar water systems are eligible for a 30% tax credit for the initial purchase and installation cost. That's good news; systems often run between $6,000 and $10,000. The credit is available through 2016, a sizable window to cash in on the benefits of lower-cost energy, and is available to those who use the solar system to heat their home's water, not that of hot tubs or pools.
New Yorkers aren't the only ones seeking to take advantage of the billions earmarked for homeowners in the stimulus package and the Obama administration's $75 billion mortgage relief plan. The White House estimates as many as 9 million Americans could benefit from the loan modification plan alone. It calls for, among other things, monthly mortgage payments of no more than 31% of a qualifying homeowner's gross income.
There are also tax breaks for first-time home buyers and homeowners who make their properties more energy efficient. Add solar panels, geothermal heaters or energy-efficient doors and windows, for example, and Uncle Sam will kick back 30% of your costs to buy and install them. That's a huge improvement from 2007-08, when many green improvements such as windows and doors earned just a 10% credit.
"In some cases, the dollar amount the consumer can get back has tripled," says Ronnie Kweller, spokesperson for Alliance to Save Energy, a Washington, D.C., nonprofit environmental advocacy group. "Heating and cooling equipment are costly and this gives folks ability to plan and budget for those types of investments."
One caveat: If you're making your home more energy efficient, you'll need to file IRS form 5695, and, in some cases, furnish the IRS with a two-year product warranty.
On the mortgage front, the government is also empowering the Federal Housing Authority to insure more expensive loans by raising the conforming loan limit to $729,750. For those under that new umbrella, it means access to lower mortgage rates, because this insurance makes these loans less risky for banks to issue.
"The good news: approximately 98% of houses are now under the conforming loan limit," says Anthony Sanders, professor of finance at Arizona State University. "The bad news: negative equity is still a major problem, particularly in the Southwest and Florida."
In a normal market, homeowners with negative equity cannot refinance because banks would lose money on such a deal. But as part of its $75 billion mortgage relief program, the Obama administration will restructure loans even in cases where the homeowner has up to 105% debt on the value of the home. That means homeowners can reduce their payments thanks to government assistance. Banks benefit because it lessens the chance of foreclosure--in theory. Changing loans is a tricky business with a bad track record.
"Loan modification programs have existed for some time now, but have, in general, been failures," says Bob Walters, chief economist of Quicken Loans. "The government is trying to correct this by creating specific requirements and a more rigorous process behind loan modifications."
The remedy? Requiring that homeowners' loans are held by Freddie and Fannie and that buyers didn't get their original mortgages with no-documentation loans or misrepresent their income in the process. To deter flippers, annual bonuses will be doled out for up to five years for on-time payments, and there is an $8,000 first-time home buyer credit, which doesn't have to be paid back if the owner stays in their home for three years.
Some states have taken these steps even further as a way to inject cash into the housing market.
"You look at California and there's a $10,000 tax credit [for first-time home buyers]," says Pete Flint, chief executive of Trulia.com, an online real-estate listing company.
Still, some believe that such programs won't quickly turn the tide of the nation's housing woes.
"It's a welcome boost and it's a reason to consider a transaction otherwise," he says, "but it's not going to change the economic fundamentals."
Though a few hundred in tax credits here and a few thousand there certainly ease the pain.
By Matt Woolsey
Forbes.com
Congress' inclusion of home energy incentives in the $787 billion stimulus plan it passed in February has a steady stream of customers heading to Manhattan's Green Depot, a nationwide chain that carries environmentally friendly and sustainable housewares such as LED light bulbs and cork flooring. Most popular? Solar products, says Brian Tereza, the store's general manager.
That could be because as part of the plan, buyers of solar water systems are eligible for a 30% tax credit for the initial purchase and installation cost. That's good news; systems often run between $6,000 and $10,000. The credit is available through 2016, a sizable window to cash in on the benefits of lower-cost energy, and is available to those who use the solar system to heat their home's water, not that of hot tubs or pools.
New Yorkers aren't the only ones seeking to take advantage of the billions earmarked for homeowners in the stimulus package and the Obama administration's $75 billion mortgage relief plan. The White House estimates as many as 9 million Americans could benefit from the loan modification plan alone. It calls for, among other things, monthly mortgage payments of no more than 31% of a qualifying homeowner's gross income.
There are also tax breaks for first-time home buyers and homeowners who make their properties more energy efficient. Add solar panels, geothermal heaters or energy-efficient doors and windows, for example, and Uncle Sam will kick back 30% of your costs to buy and install them. That's a huge improvement from 2007-08, when many green improvements such as windows and doors earned just a 10% credit.
"In some cases, the dollar amount the consumer can get back has tripled," says Ronnie Kweller, spokesperson for Alliance to Save Energy, a Washington, D.C., nonprofit environmental advocacy group. "Heating and cooling equipment are costly and this gives folks ability to plan and budget for those types of investments."
One caveat: If you're making your home more energy efficient, you'll need to file IRS form 5695, and, in some cases, furnish the IRS with a two-year product warranty.
On the mortgage front, the government is also empowering the Federal Housing Authority to insure more expensive loans by raising the conforming loan limit to $729,750. For those under that new umbrella, it means access to lower mortgage rates, because this insurance makes these loans less risky for banks to issue.
"The good news: approximately 98% of houses are now under the conforming loan limit," says Anthony Sanders, professor of finance at Arizona State University. "The bad news: negative equity is still a major problem, particularly in the Southwest and Florida."
In a normal market, homeowners with negative equity cannot refinance because banks would lose money on such a deal. But as part of its $75 billion mortgage relief program, the Obama administration will restructure loans even in cases where the homeowner has up to 105% debt on the value of the home. That means homeowners can reduce their payments thanks to government assistance. Banks benefit because it lessens the chance of foreclosure--in theory. Changing loans is a tricky business with a bad track record.
"Loan modification programs have existed for some time now, but have, in general, been failures," says Bob Walters, chief economist of Quicken Loans. "The government is trying to correct this by creating specific requirements and a more rigorous process behind loan modifications."
The remedy? Requiring that homeowners' loans are held by Freddie and Fannie and that buyers didn't get their original mortgages with no-documentation loans or misrepresent their income in the process. To deter flippers, annual bonuses will be doled out for up to five years for on-time payments, and there is an $8,000 first-time home buyer credit, which doesn't have to be paid back if the owner stays in their home for three years.
Some states have taken these steps even further as a way to inject cash into the housing market.
"You look at California and there's a $10,000 tax credit [for first-time home buyers]," says Pete Flint, chief executive of Trulia.com, an online real-estate listing company.
Still, some believe that such programs won't quickly turn the tide of the nation's housing woes.
"It's a welcome boost and it's a reason to consider a transaction otherwise," he says, "but it's not going to change the economic fundamentals."
Though a few hundred in tax credits here and a few thousand there certainly ease the pain.
Saturday, March 14, 2009
Wednesday, February 4, 2009
Eyeing a Refi? The Time is Now
Many homeowners may feel like burying their head in the sand, an understandable sentiment given the recent shakeup in many markets. But with most interest rates in 2009 hanging around the lowest levels in decades, those playing the "ignorance is bliss" game may be missing out on a rare chance to improve their finances.
The Advantages of Now
Interest rates have dipped to levels not seen in decades, particularly on fixed-rate loans for prime borrowers. As the new year and a new administration get into full swing, average interest rates on 30-year fixed rate mortgages have hovered in the low 5% range (and in some cases, have dropped below 5%).While these rates have yet to translate into a quick turnaround home sales, they have spurned an increase in mortgage applications by homeowners looking to refinance at a lower rate. For homeowners sitting on a higher fixed rate or a less stable variable rate loan, the current interest rates may present an opportunity that just can't be ignored.
If you've been considering a refinance but have been waiting to see exactly how far rates will drop, this just may be the time to make a move.
While the last few weeks have seen an increase in refinancing applications, a sizable percentage of these applications will not be approved. Low interest rates aside, lenders are focused on protecting their investors and to that end have more stringent credit requirements than in years past.
Homeowners who owe more than the current market value of their homes are unlikely to be approved for refinancing. By the same token, would-be borrowers with low credit scores or without well-documented income have a much greater chance of being denied. Some homeowners who hold jumbo mortgages (over the $625,000 limit for loans that can by guaranteed/bought by Fannie Mae or Freddie Mac in high cost areas) may find refinancing hard to come by.
• Do You Qualify? - Do you have a solid credit score (660 and above)? Are you up to date on your current mortgage payments? If the answer to either is no, your chances of being approved are much worse. Also, if you are shopping for a cash-out refinance, you'll find that the credit and loan-to-value requirements are even more stringent.
• Establish Value - The next step is to begin determining your home's value. You can use various online resources to get a rough gauge of current market value. Some owners will pay for their own appraisal prior to applying for the mortgage. Other homeowners have been known to seek a ballpark estimate from their real estate agent.
• Compare Savings - Conventional wisdom was that a refinance loan should be 2 percentage points below your current mortgage to be worthwhile. That standard may not apply, however if you can lower your interest rate slightly but still recoup closing costs in a short time span. Likewise, switching from an adjustable rate to a fixed rate mortgage may be worthwhile regardless. Be wary of refinancing that extends the life of the loan, as this will most likely make the loan more expensive over the long term.
• Prepare for Screening - Lending standards have become much stricter over the last year. Be prepared to discuss all aspects of your credit, your current loan and your income history. Have at least a two-year documentation of your income, as "stated income" mortgages have all but gone by the wayside.
The Advantages of Now
Interest rates have dipped to levels not seen in decades, particularly on fixed-rate loans for prime borrowers. As the new year and a new administration get into full swing, average interest rates on 30-year fixed rate mortgages have hovered in the low 5% range (and in some cases, have dropped below 5%).While these rates have yet to translate into a quick turnaround home sales, they have spurned an increase in mortgage applications by homeowners looking to refinance at a lower rate. For homeowners sitting on a higher fixed rate or a less stable variable rate loan, the current interest rates may present an opportunity that just can't be ignored.
If you've been considering a refinance but have been waiting to see exactly how far rates will drop, this just may be the time to make a move.
What to Expect
While the last few weeks have seen an increase in refinancing applications, a sizable percentage of these applications will not be approved. Low interest rates aside, lenders are focused on protecting their investors and to that end have more stringent credit requirements than in years past.
Homeowners who owe more than the current market value of their homes are unlikely to be approved for refinancing. By the same token, would-be borrowers with low credit scores or without well-documented income have a much greater chance of being denied. Some homeowners who hold jumbo mortgages (over the $625,000 limit for loans that can by guaranteed/bought by Fannie Mae or Freddie Mac in high cost areas) may find refinancing hard to come by.
What to Do
• Do You Qualify? - Do you have a solid credit score (660 and above)? Are you up to date on your current mortgage payments? If the answer to either is no, your chances of being approved are much worse. Also, if you are shopping for a cash-out refinance, you'll find that the credit and loan-to-value requirements are even more stringent.
• Establish Value - The next step is to begin determining your home's value. You can use various online resources to get a rough gauge of current market value. Some owners will pay for their own appraisal prior to applying for the mortgage. Other homeowners have been known to seek a ballpark estimate from their real estate agent.
• Compare Savings - Conventional wisdom was that a refinance loan should be 2 percentage points below your current mortgage to be worthwhile. That standard may not apply, however if you can lower your interest rate slightly but still recoup closing costs in a short time span. Likewise, switching from an adjustable rate to a fixed rate mortgage may be worthwhile regardless. Be wary of refinancing that extends the life of the loan, as this will most likely make the loan more expensive over the long term.
• Prepare for Screening - Lending standards have become much stricter over the last year. Be prepared to discuss all aspects of your credit, your current loan and your income history. Have at least a two-year documentation of your income, as "stated income" mortgages have all but gone by the wayside.
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