A new survey reveals that savvy consumers cashing in on the new and improved homebuyer tax credit are helping fuel economic recovery.
The vast majority of current homeowners say they would spend the expanded version of the homebuyer tax credit on repaying existing debts, home improvements, savings and investments and household expenses, according to a Coldwell Banker survey of 1,000 homeowners.
Paying off debts affords consumers more spending power, home improvements likewise put more equity money in their pockets and savings and investments generate income.
Consumer spending, of course, is the real fuel for the nation's economic engine. And much consumer spending is fueled by the housing market -- provided the housing market is energized.
Helping to energize the housing market and the economy is the idea behind the homebuyer tax credit and it's recent extension and expansion.
By October 2009, before President Obama signed the latest extension and expansion, more than 1.2 million tax returns had claimed about $8.5 billion in the refundable tax credit, for both new and resale homes - according to the Treasury Inspector General for Tax Administration (TIGTA).
The new law extends the existing credit for first-time homebuyers, worth up to $8,000, through April 30, 2010.
A new credit of up to $6,500 is available to qualifying existing homeowners who buy a new primary residence (or have one built) by April 30, 2010, if they owned their existing home for five consecutive years over the last eight years. Second homes don't qualify.
The new rule also raises the qualifying income limits to $125,000 for single taxpayers and $225,000 for joint taxpayers, from the current $75,000 and $150,000.
The maximum allowed home purchase price is $800,000.
More information is available from the Internal Revenue Service (IRS), including its question and answer page.
As a tangible asset with a host of other tax breaks and the potential for equity gain, a home is often a consumer's most valuable asset.
As the economic theory goes, when more consumers buy homes, the economy gets a boost.
Coldwell Banker's survey appears to confirm the theory.
Among those surveyed, 83 percent said if they purchased a home and qualified for the tax credit they would engage in "smart spending" on things that could ultimately increase income available for spending.
Only 6 percent said they would squander the money on luxury items such as vacation or shopping spree.
According to the survey most consumers would spend their tax credit:
• To pay off debts (34 percent). Paying off debts leaves more money to spend or save and invest for returns that again generate spending money.
• To make home improvements and potentially increase the value of their home and home equity (29 percent). Home equity, can be a way to consolidate other, more expensive debt or spend further on capital improvements that generate more returns on the money.
• To put into savings and investments (28 percent). Saving and investing for returns is a much better personal financial approach than using credit for purchases.
Coldwell Banker also found, after learning about the tax credit expansion, 20 percent of those surveyed said they were more likely to consider purchasing a home than they were six months ago.
Of course, what will happen when the tax credit expires in 2010, without another extension, is anyone's guess.
This article was published in Realty Times
Written by: Broderick Perkins, January 28, 2010
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Friday, January 29, 2010
Wednesday, January 27, 2010
How to Repair Your Home Without Damaging Your Wallet
Some homeowners have a long laundry list of to-do repairs and, interestingly enough, many of those items don't get addressed until (or if at all) it's time to sell the house. In hot real estate markets, repairs are sometimes not done before the sale. Remember bidding wars over properties that needed work? Well, today sellers are looking for the advantage that makes their home stand out. Even though housing inventory declined toward the end of last year, it's expected to rise as more foreclosures tumble into the marketplace this year.
While fixing up a home to sell can be costly, there are some ways to reduce the damage to your wallet. Cheryl Reed from Angie's List spoke to me about important repairs that shouldn't be overlooked. They are: changing your furnace air filters regularly, fixing leaky faucets/toilets, repairing caulking issues in the bathroom and defective electrical outlets/wiring.
"Our experts in the heating ventilation air conditioning industry tell us that 60 percent of all their service calls start because it's a dirty filter issue. If you have a dirty filter, it affects the efficiency of your furnace," says Reed. She says that it's a simple and easy repair that improves the air quality and saves you money.
"You can save about $100 a year if you just change those filters when you should." She recommends checking your air filter every time you get your energy bill. "If it's dirty and you can tell, you can see it; just switch it out. You can buy a number of air filters ranging from moderately good to really expensive and high efficiency, in terms of cleaning the air. You have a number of different options, depending on your budget," says Reed. She also says, depending on health conditions of those living in the home, changing filters more frequently might be necessary. The second repair is annoying and easy to spot. "If you've got a leaky faucet or running toilet, that's going to cost you," says Reed. "If you don't get it fixed you're going to be paying more and more. It can also lead to mold damage. It can lead to a loss of your cabinetry—the flooring in your cabinetry can be rotted away and that can affect your floor underneath and the walls. So you can have a big issue if it's not fixed soon," says Reed.
If there are problems with your home when you begin to show it, buyers will spot them. Reed says, "People who come to your house to check out whether they're going to buy it or not are looking really closely and they're listening really closely too." With plenty of housing inventory on the market, buyers are likely to move on if they feel the house needs a lot of repairs.
"You have to put forth your best impression. These small relatively inexpensive fixes are really important," says Reed.
Dirty tiles and damaged caulking can send a message to buyers that the house may be in need of even bigger repairs. "You're first going to have an aesthetic issue and second that's an indication that you've got a problem that could lead to mold and nobody wants mold in their house anywhere at all—it will grow if you don't have proper seals in your bathroom," says Reed.
"Those are things that you can see every day—sometimes we get so used to seeing them that we forget about them," says Reed. However, buyers don't.
Reed offers this advice, "Pretend you're going to try to buy your own home; what do you see that you wouldn't tolerate?" She says it's worth it to take the steps to fix the problems. Buyers don't want to fix those problems any more than sellers do. Check for defective outlets. Electrical problems are not only irritating but also can be very hazardous. "An electrical fire can destroy your home," says Reed.
Who should do the job? Of course, saving money is always key. Reed says some of these repairs might be suitable for a handyman but she cautions homeowners to be sure that the level of the repair matches the expertise of the person you hire.
"You're going to pay more in the end if you don't check out the person you hire to help you. Make sure that person has a good reputation and if it's required for him or her to be licensed in your area, you really should [use] a licensed person, even if it's more expensive," says Reed. Reed says, you may pay more but you'll get the job done right the first time.
Article Published on Realty Times
Written by Phoebe Chongchua
January 22, 2010
While fixing up a home to sell can be costly, there are some ways to reduce the damage to your wallet. Cheryl Reed from Angie's List spoke to me about important repairs that shouldn't be overlooked. They are: changing your furnace air filters regularly, fixing leaky faucets/toilets, repairing caulking issues in the bathroom and defective electrical outlets/wiring.
"Our experts in the heating ventilation air conditioning industry tell us that 60 percent of all their service calls start because it's a dirty filter issue. If you have a dirty filter, it affects the efficiency of your furnace," says Reed. She says that it's a simple and easy repair that improves the air quality and saves you money.
"You can save about $100 a year if you just change those filters when you should." She recommends checking your air filter every time you get your energy bill. "If it's dirty and you can tell, you can see it; just switch it out. You can buy a number of air filters ranging from moderately good to really expensive and high efficiency, in terms of cleaning the air. You have a number of different options, depending on your budget," says Reed. She also says, depending on health conditions of those living in the home, changing filters more frequently might be necessary. The second repair is annoying and easy to spot. "If you've got a leaky faucet or running toilet, that's going to cost you," says Reed. "If you don't get it fixed you're going to be paying more and more. It can also lead to mold damage. It can lead to a loss of your cabinetry—the flooring in your cabinetry can be rotted away and that can affect your floor underneath and the walls. So you can have a big issue if it's not fixed soon," says Reed.
If there are problems with your home when you begin to show it, buyers will spot them. Reed says, "People who come to your house to check out whether they're going to buy it or not are looking really closely and they're listening really closely too." With plenty of housing inventory on the market, buyers are likely to move on if they feel the house needs a lot of repairs.
"You have to put forth your best impression. These small relatively inexpensive fixes are really important," says Reed.
Dirty tiles and damaged caulking can send a message to buyers that the house may be in need of even bigger repairs. "You're first going to have an aesthetic issue and second that's an indication that you've got a problem that could lead to mold and nobody wants mold in their house anywhere at all—it will grow if you don't have proper seals in your bathroom," says Reed.
"Those are things that you can see every day—sometimes we get so used to seeing them that we forget about them," says Reed. However, buyers don't.
Reed offers this advice, "Pretend you're going to try to buy your own home; what do you see that you wouldn't tolerate?" She says it's worth it to take the steps to fix the problems. Buyers don't want to fix those problems any more than sellers do. Check for defective outlets. Electrical problems are not only irritating but also can be very hazardous. "An electrical fire can destroy your home," says Reed.
Who should do the job? Of course, saving money is always key. Reed says some of these repairs might be suitable for a handyman but she cautions homeowners to be sure that the level of the repair matches the expertise of the person you hire.
"You're going to pay more in the end if you don't check out the person you hire to help you. Make sure that person has a good reputation and if it's required for him or her to be licensed in your area, you really should [use] a licensed person, even if it's more expensive," says Reed. Reed says, you may pay more but you'll get the job done right the first time.
Article Published on Realty Times
Written by Phoebe Chongchua
January 22, 2010
Monday, January 25, 2010
Gorgeous Condo Overlooking Golf Course in Lake Tahoe!
Great News for Buyers!If you are looking for a beautiful property overlooking the Championship Golf Course in Lake Tahoe...We have the perfect solution for you!
This beautifully remodeled three bedroom, three bath end unit overlooks the 10th Fairway of the Championship Golf Course! On the entry level the master suite boasts a lovely marble surrounded gas fireplace, a private deck and master bath with double vanities. This level also includes another bedroom and full bath with a nice storage room / ironing area between them. A lovely hardwood stairway leads invitingly to the upper level. The kitchen features granite slab countertops, a convenient breakfast bar and hardwood floor. The living room offers a striking marble surrounded fireplace and deck overlooking the golf course. The upper level also includes the dining area, another bedroom and bathroom with a convenient stack washer and dryer. Other features include a common swimming pool and you can walk to the Championship Golf Course driving range and clubhouse from this delightful condo!
Call Us For Details!
Thinking about Buying or Selling?
Call Alvin's Team Today! 800-666-4718
Or visit our website: www.LivingLakeTahoe.com
Call Alvin's Team Today! 800-666-4718
Or visit our website: www.LivingLakeTahoe.com
Friday, January 22, 2010
30-Year Rates Down For Third Consecutive Week
McLean, VA –Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 4.99 percent with an average 0.7 point for the week ending January 21, 2010, down from last week when it averaged 5.06 percent. Last year at this time, the 30-year FRM averaged 5.12 percent.
The 15-year FRM this week averaged 4.40 percent with an average 0.6 point, down from last week when it averaged 4.45 percent. A year ago at this time, the 15-year FRM averaged 4.80 percent. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.27 percent this week, with an average 0.6 point, down from last week when it averaged 4.32 percent. A year ago, the 5-year ARM averaged 5.24 percent.
The 1-year Treasury-indexed ARM averaged 4.32 percent this week with an average 0.6 point, down from last week when it averaged 4.39 percent. At this time last year, the 1-year ARM averaged 4.92 percent.
"Fixed mortgage rates followed bond yields lower for the third consecutive week, pushing 30-year mortgages below 5 percent once more," said Frank Nothaft, Freddie Mac vice president and chief economist. "Similarly, ARM rates eased along with shorter-term rates, as the federal funds futures market indicates no increase in the Federal Reserve's target rate following its upcoming committee meeting on January 26th and 27th.
"Because of reduced sample sizes and work disruptions that occur with severe weather, housing starts tend to be more volatile during winter months. And, indeed, housing starts declined 4.0 percent in December, falling short of the market consensus of no change. Building permits , which are less vulnerable to weather interruptions, unexpectedly jumped 10.9 percent."
This article was published in Realty Times
Written by: Realty Times Staff, January 22, 2010
Thinking about Buying or Selling?
Call Alvin's Team Today! 800-666-4718
Or visit our website: www.LivingLakeTahoe.com
Wednesday, January 20, 2010
Fixed-Rates Down Slightly While ARMs Are Mixed
McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMS) in which the 30-year fixed-rate mortgage (FRM) averaged 5.06 percent with an average 0.7 point for the week ending January 14, 2010, down from last week when it averaged 5.09 percent. Last year at this time, the 30-year FRM averaged 4.96 percent.
The 15-year FRM this week averaged 4.45 percent with an average 0.6 point, down from last week when it averaged 4.50 percent. A year ago at this time, the 15-year FRM averaged 4.65 percent.
The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.32 percent this week, with an average 0.6 point, down from last week when it averaged 4.44 percent. A year ago, the 5-year ARM averaged 5.25 percent.
The 1-year Treasury-indexed ARM averaged 4.39 percent this week with an average 0.5 point, up from last week when it averaged 4.31 percent. At this time last year, the 1-year ARM averaged 4.89 percent.
"Interest rates for fixed-rate mortgages eased a little further this week, while ARM rates were mixed," said Frank Nothaft, Freddie Mac vice president and chief economist. "With fixed mortgage rates staying near a record low, many homeowners are taking the opportunity to refinance. For instance, over the past three-and-a-half months, on average more than 75 percent of conventional mortgage applications were for refinance transactions, according to the Mortgage Bankers Association."
"The Federal Reserve recently reported positive news in both the housing market and the overall state of the economy in its January 13th regional economic report, which spanned the last few months of 2009. Economic activity improved in 10 of its 12 districts. Home sales, especially for lower-priced homes, increased due in part to the homebuyer tax credit and house prices appeared to have changed little since its last report."
Article Published in Realty Times
January 15, 2010
The 15-year FRM this week averaged 4.45 percent with an average 0.6 point, down from last week when it averaged 4.50 percent. A year ago at this time, the 15-year FRM averaged 4.65 percent.
The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.32 percent this week, with an average 0.6 point, down from last week when it averaged 4.44 percent. A year ago, the 5-year ARM averaged 5.25 percent.
The 1-year Treasury-indexed ARM averaged 4.39 percent this week with an average 0.5 point, up from last week when it averaged 4.31 percent. At this time last year, the 1-year ARM averaged 4.89 percent.
"Interest rates for fixed-rate mortgages eased a little further this week, while ARM rates were mixed," said Frank Nothaft, Freddie Mac vice president and chief economist. "With fixed mortgage rates staying near a record low, many homeowners are taking the opportunity to refinance. For instance, over the past three-and-a-half months, on average more than 75 percent of conventional mortgage applications were for refinance transactions, according to the Mortgage Bankers Association."
"The Federal Reserve recently reported positive news in both the housing market and the overall state of the economy in its January 13th regional economic report, which spanned the last few months of 2009. Economic activity improved in 10 of its 12 districts. Home sales, especially for lower-priced homes, increased due in part to the homebuyer tax credit and house prices appeared to have changed little since its last report."
Article Published in Realty Times
January 15, 2010
Monday, January 18, 2010
Washington Report: GFE Rules
HUD officials say they plan to conduct a review of the growing use of “worksheets” and “fee estimate” forms by mortgage lenders providing quotes to home buyers and refinancers since the first of January.
The worksheets are a reaction by the mortgage industry to HUD's tough new “good faith estimates” (or GFE) rules that went into effect on New Year's.
HUD's revised GFEs require loan officers to provide accurate estimates of their origination fees and expected settlement costs.
If there are significant deviations from the GFE, which must be issued within three days of a mortgage application, and the HUD-1 settlement sheet, the lender must eat the difference.
That's in stark contrast to earlier rules, which essentially allowed some lenders to quote low estimates of total costs, with no responsibility for the final dollar charges at closing.
Homebuyers sometimes found that they owed hundreds -- even thousands -- of dollars more at closing than was estimated up front. Those eleventh hour settlement surprises prompted HUD to tighten the rules.
The revised GFE also was explicitly designed to serve as consumers' primary shopping tool to compare home loan quotes. The form contains space for quotes from up to four competing lenders.
The January first start date for the toughened GFEs upset lenders who feared monetary losses if they didn't get their estimates right up front. To lessen that risk, many companies began offering rough estimates that come with no penalties if they are inaccurate.
Homebuyers who inquire about a lender's rates and fees, but do not submit a formal application including property address and Social Security number, are now receiving what are essentially unregulated estimates with no guarantees.
Loan officers defend them as a useful tool for handling shoppers who may not be ready to provide all the required application information.
“I think they're a great idea,” said Marc Savitt, past president of the National Association of Mortgage Brokers. “If somebody is just shopping, we give them an 'initial fees worksheet.' If they make a full application, then we need to issue a GFE.”
Vicki Bott, HUD's deputy assistant secretary for single family housing, said the rules do not address “worksheets,” but said she would look into how they are being used by the industry.
If they are misleading home buyers or lessening the legal protections provided to consumers by the reform rules, “we will need to reach out to the industry” and issue “updated guidance,”she said.
Here's our guidance to buyers and realty agents in the meantime: Be aware that here's a BIG difference between informal cost estimates and a real GFE.
This article was published in Realty Times
Written by: Kenneth R. Harney, January 18, 2010
Thinking about Buying or Selling?
Call Alvin's Team Today! 800-666-4718
Or visit our website: www.LivingLakeTahoe.com
The worksheets are a reaction by the mortgage industry to HUD's tough new “good faith estimates” (or GFE) rules that went into effect on New Year's.
HUD's revised GFEs require loan officers to provide accurate estimates of their origination fees and expected settlement costs.
If there are significant deviations from the GFE, which must be issued within three days of a mortgage application, and the HUD-1 settlement sheet, the lender must eat the difference.
That's in stark contrast to earlier rules, which essentially allowed some lenders to quote low estimates of total costs, with no responsibility for the final dollar charges at closing.
Homebuyers sometimes found that they owed hundreds -- even thousands -- of dollars more at closing than was estimated up front. Those eleventh hour settlement surprises prompted HUD to tighten the rules.
The revised GFE also was explicitly designed to serve as consumers' primary shopping tool to compare home loan quotes. The form contains space for quotes from up to four competing lenders.
The January first start date for the toughened GFEs upset lenders who feared monetary losses if they didn't get their estimates right up front. To lessen that risk, many companies began offering rough estimates that come with no penalties if they are inaccurate.
Homebuyers who inquire about a lender's rates and fees, but do not submit a formal application including property address and Social Security number, are now receiving what are essentially unregulated estimates with no guarantees.
Loan officers defend them as a useful tool for handling shoppers who may not be ready to provide all the required application information.
“I think they're a great idea,” said Marc Savitt, past president of the National Association of Mortgage Brokers. “If somebody is just shopping, we give them an 'initial fees worksheet.' If they make a full application, then we need to issue a GFE.”
Vicki Bott, HUD's deputy assistant secretary for single family housing, said the rules do not address “worksheets,” but said she would look into how they are being used by the industry.
If they are misleading home buyers or lessening the legal protections provided to consumers by the reform rules, “we will need to reach out to the industry” and issue “updated guidance,”she said.
Here's our guidance to buyers and realty agents in the meantime: Be aware that here's a BIG difference between informal cost estimates and a real GFE.
This article was published in Realty Times
Written by: Kenneth R. Harney, January 18, 2010
Thinking about Buying or Selling?
Call Alvin's Team Today! 800-666-4718
Or visit our website: www.LivingLakeTahoe.com
Friday, January 15, 2010
Stunning Lake View Home in Lake Tahoe!
Great News for Buyers!If you are looking for a beautiful lake view property in Lake Tahoe...We have the perfect home for you!
This stunning, remodeled lake view home has been beautifully finished in Travertine, marble, maple and neutral tones. On the entry level, the beautiful gourmet kitchen features a center island with breakfast bar, marble countertops and is open to the living room. A stone gas log fireplace is featured in the living room with sliding door access onto the lake view deck. This level also includes a dining room, bedroom, bathroom and the master bedroom/bath. Mid-level features include a comfortable den with sliding door access onto the deck, four bedrooms and two bathrooms (including a guest master bedroom/bath). A spacious game room with wet bar on the lower level ensures having plenty of room for your family and friends. This gorgeous home is designed to perfectly balance everyone’s needs for time together and apart!
Call Us For Details!
Thinking about Buying or Selling?
Call Alvin's Team Today! 800-666-4718
Wednesday, January 13, 2010
Make Sure You Can Afford Your Dream Home
For first-time buyers in particular, it’s a confusing time. Canada is just coming out of a tough recession that cost a lot of jobs and hurt consumer confidence. Everyone is aware of the troubled real estate market in the U.S. But since the spring, Canada’s resale housing market has been booming, thanks to rock-bottom mortgage interest rates. So is now the time to buy and take advantage of the low rates?
“While today’s ultra-low borrowing costs represent a unique opportunity to purchase a property, home buyers need to proceed with caution and keep in mind that renewal rates will likely be substantially higher in coming years,” says Sal Guatieri, senior economist with BMO Capital Markets.
Jan Yuen, a senior manager at BMO Capital Markets, adds: “Stretching the limits of your budget by choosing the maximum amortization period and a minimum downpayment leaves you little wiggle room to deal with an unexpected financial challenge. A meaningful downpayment and shortening your amortization by making extra payments on your mortgage will save you tens of thousands of dollars in interest costs.”
For example, Benjamin Tal of CIBC World Markets says that on a $250,000 mortgage with a five per cent rate amortized over 30 years, adding a full month of extra payments each year “works out to a de facto shortening of the mortgage amortization period by five years.” If interest rates have gone up, “translating years into basis points means that by simply switching from an accelerated payment plan to a regular one” means borrowers would be able to absorb the first 75 basic points on a rate increase, says Tal.
BMO advises borrowers to do a “stress test” on their budget to see if they can afford rate increases. For example, “customers looking to renew a $250,000 mortgage currently priced at 2.25 per cent would see their monthly payment to increase by $260 a month if rates were to increase by two percentage points,” says BMO.
BMO also suggests that mortgage holders make weekly or bi-weekly mortgage payments if possible. They should also take a close look at fixed versus variable-rate mortgages. “While variable-rate mortgages have been a winning strategy over the long term, fixed-rate mortgages (currently at historic lows) come with the peace of mind of being insulated against rate increases and knowing how much of your mortgage you will have paid down at the end of your term.”
It says total household costs, including mortgage payments, property taxes, heating and utilities, should not be more than one-third of household income.
The Bank of Canada says that 5.9 per cent of Canadian households are vulnerable to rising interest rates because their debt-service ratio is more than 40 per cent. It says that if rates rise by 300 basis points by 2012, that percentage of vulnerable households would rise to 8.5 per cent.
But in a recent report, Tal says that “focusing on a borrower’s debt-service ratio with no reference to the underlying asset (the equity in the house) can be misleading.” He says when equity is added to the equation, the number of households that would be vulnerable to a rate shock is less than four per cent.
Another potential buffer to “rate shock,” says Tal, “is the fact that most Canadian financial institutions limit their variable-rate customers to a mortgage that they would qualify for at today’s three-year fixed-term rate, well above current variable rates. While all borrowers will face the impact of higher rates, most of them will therefore be able to absorb a 300 basis point rate hike and still remain within the qualification threshold.”
Tal adds: “Also note that in general, low-income Canadians tend to rely more heavily on fixed-rate mortgages – the complete opposite of the situation south of the border where low-income Americans were heavy users of variable-rate mortgages. While even fixed-term mortgages will eventually be reset, the longer time frame for any hikes in their borrowing rates leaves them with more time to pay down principal and benefit from rising incomes before that hits.”
Many analysts believe the housing market will slow down during the coming year, and that house prices will not appreciate as rapidly as in 2009. In the housing industry, everyone from the Mortgage Brokers Association of British Columbia to the president of the Building Industry and Land Development Association of Toronto is urging Flaherty to let the market settle down on its own before taking regulatory steps.
This article published in Realty Times
Written by Jim Adair
January 11, 2010
Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com
“While today’s ultra-low borrowing costs represent a unique opportunity to purchase a property, home buyers need to proceed with caution and keep in mind that renewal rates will likely be substantially higher in coming years,” says Sal Guatieri, senior economist with BMO Capital Markets.
Jan Yuen, a senior manager at BMO Capital Markets, adds: “Stretching the limits of your budget by choosing the maximum amortization period and a minimum downpayment leaves you little wiggle room to deal with an unexpected financial challenge. A meaningful downpayment and shortening your amortization by making extra payments on your mortgage will save you tens of thousands of dollars in interest costs.”
For example, Benjamin Tal of CIBC World Markets says that on a $250,000 mortgage with a five per cent rate amortized over 30 years, adding a full month of extra payments each year “works out to a de facto shortening of the mortgage amortization period by five years.” If interest rates have gone up, “translating years into basis points means that by simply switching from an accelerated payment plan to a regular one” means borrowers would be able to absorb the first 75 basic points on a rate increase, says Tal.
BMO advises borrowers to do a “stress test” on their budget to see if they can afford rate increases. For example, “customers looking to renew a $250,000 mortgage currently priced at 2.25 per cent would see their monthly payment to increase by $260 a month if rates were to increase by two percentage points,” says BMO.
BMO also suggests that mortgage holders make weekly or bi-weekly mortgage payments if possible. They should also take a close look at fixed versus variable-rate mortgages. “While variable-rate mortgages have been a winning strategy over the long term, fixed-rate mortgages (currently at historic lows) come with the peace of mind of being insulated against rate increases and knowing how much of your mortgage you will have paid down at the end of your term.”
It says total household costs, including mortgage payments, property taxes, heating and utilities, should not be more than one-third of household income.
The Bank of Canada says that 5.9 per cent of Canadian households are vulnerable to rising interest rates because their debt-service ratio is more than 40 per cent. It says that if rates rise by 300 basis points by 2012, that percentage of vulnerable households would rise to 8.5 per cent.
But in a recent report, Tal says that “focusing on a borrower’s debt-service ratio with no reference to the underlying asset (the equity in the house) can be misleading.” He says when equity is added to the equation, the number of households that would be vulnerable to a rate shock is less than four per cent.
Another potential buffer to “rate shock,” says Tal, “is the fact that most Canadian financial institutions limit their variable-rate customers to a mortgage that they would qualify for at today’s three-year fixed-term rate, well above current variable rates. While all borrowers will face the impact of higher rates, most of them will therefore be able to absorb a 300 basis point rate hike and still remain within the qualification threshold.”
Tal adds: “Also note that in general, low-income Canadians tend to rely more heavily on fixed-rate mortgages – the complete opposite of the situation south of the border where low-income Americans were heavy users of variable-rate mortgages. While even fixed-term mortgages will eventually be reset, the longer time frame for any hikes in their borrowing rates leaves them with more time to pay down principal and benefit from rising incomes before that hits.”
Many analysts believe the housing market will slow down during the coming year, and that house prices will not appreciate as rapidly as in 2009. In the housing industry, everyone from the Mortgage Brokers Association of British Columbia to the president of the Building Industry and Land Development Association of Toronto is urging Flaherty to let the market settle down on its own before taking regulatory steps.
This article published in Realty Times
Written by Jim Adair
January 11, 2010
Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com
Monday, January 11, 2010
Real Estate Investors Returning to Market
Savvy investors are always the first to jump in a potentially profitable housing market and a new survey indicates things are heating up.
More than 12 percent of homebuyers today plan to purchase a home as an investment, compared to less than half, only 5.6 percent, just seven months ago, according to a recent Move.com Homeownership Survey.
Foreclosure buyers account for 25.3 percent of consumers interested in purchasing a home and 42 percent of potential foreclosure buyers regard their purchases as investments, while 57.6 percent plan to live in the foreclosed home themselves.
"This latest Homeownership Survey validates what many had hoped to see in the housing markets -- affordable prices and ample inventories are restoring the appeal of real estate to investors while providing opportunities for first time home buyers to enter the market," said Move, Inc.'s chief revenue officer, Errol Samuelson.
Interest rates below 5 percent for much of the year and low home prices, which may be at or near market bottom, are also bringing investors back to the fold.
The new and improved home-buyer tax credit, no longer just for first time home buyers, can also be a boost for those taking the practical approach to investing by buying their own home first.
The survey of 1,004 consumers, conducted from October 16 to 18 this year, found:
• Foreclosure buyers are confident they will profit from discounted purchase prices, as well as healthy appreciation rates over the next five years.
• Most foreclosure buyers, 58.2 percent, expect to pay 20 percent or less than market price for a foreclosure, while 38.5 percent expect a 25 percent or greater discount.
• Expectations are high -- 73 percent expect their properties to appreciate ten percent or more in five years, 28 percent expect their purchases to appreciate 20 percent or more.
Given the current market of flat and falling home prices, that may sound like high hopes, but RealtyTrac.com explains that lenders want to unload overhead-heavy inventories of repossessed and foreclosed home.
That forces lenders to list their homes below market and offer properties at a discount, giving the buyer some built in equity.
• Foreclosure buyers intend to convert their foreclosures into rentals (13.2 percent), fix them up for re-sale (11.3 percent), or house a family member until the home can be sold at a profit (17.4 percent).
In some markets, especially resort and vacation rental markets, where rents are higher, conditions bode well for investors who want to enjoy positive cash flow as they wait for equity to build.
"If you find a well priced property located in a healthy rental market and are able to manage and monitor the property and maintain a positive cash flow from the onset for a unit used strictly for income purposes, rather than being held with the expectation of price appreciation, this could be a good time to become a landlord," said Nancy Osborne, chief operating officer of Erate.com, a Santa Clara, CA-based financial information publisher and interest rate tracker.
This article was published in Realty Times
Written by: Broderick Perkins, January 7, 2010
Thinking about Buying or Selling?
Call Alvin's Team Today! 800-666-4718
Or visit our website: www.LivingLakeTahoe.com
More than 12 percent of homebuyers today plan to purchase a home as an investment, compared to less than half, only 5.6 percent, just seven months ago, according to a recent Move.com Homeownership Survey.
Foreclosure buyers account for 25.3 percent of consumers interested in purchasing a home and 42 percent of potential foreclosure buyers regard their purchases as investments, while 57.6 percent plan to live in the foreclosed home themselves.
"This latest Homeownership Survey validates what many had hoped to see in the housing markets -- affordable prices and ample inventories are restoring the appeal of real estate to investors while providing opportunities for first time home buyers to enter the market," said Move, Inc.'s chief revenue officer, Errol Samuelson.
Interest rates below 5 percent for much of the year and low home prices, which may be at or near market bottom, are also bringing investors back to the fold.
The new and improved home-buyer tax credit, no longer just for first time home buyers, can also be a boost for those taking the practical approach to investing by buying their own home first.
The survey of 1,004 consumers, conducted from October 16 to 18 this year, found:
• Foreclosure buyers are confident they will profit from discounted purchase prices, as well as healthy appreciation rates over the next five years.
• Most foreclosure buyers, 58.2 percent, expect to pay 20 percent or less than market price for a foreclosure, while 38.5 percent expect a 25 percent or greater discount.
• Expectations are high -- 73 percent expect their properties to appreciate ten percent or more in five years, 28 percent expect their purchases to appreciate 20 percent or more.
Given the current market of flat and falling home prices, that may sound like high hopes, but RealtyTrac.com explains that lenders want to unload overhead-heavy inventories of repossessed and foreclosed home.
That forces lenders to list their homes below market and offer properties at a discount, giving the buyer some built in equity.
• Foreclosure buyers intend to convert their foreclosures into rentals (13.2 percent), fix them up for re-sale (11.3 percent), or house a family member until the home can be sold at a profit (17.4 percent).
In some markets, especially resort and vacation rental markets, where rents are higher, conditions bode well for investors who want to enjoy positive cash flow as they wait for equity to build.
"If you find a well priced property located in a healthy rental market and are able to manage and monitor the property and maintain a positive cash flow from the onset for a unit used strictly for income purposes, rather than being held with the expectation of price appreciation, this could be a good time to become a landlord," said Nancy Osborne, chief operating officer of Erate.com, a Santa Clara, CA-based financial information publisher and interest rate tracker.
This article was published in Realty Times
Written by: Broderick Perkins, January 7, 2010
Thinking about Buying or Selling?
Call Alvin's Team Today! 800-666-4718
Or visit our website: www.LivingLakeTahoe.com
Friday, January 8, 2010
Real Estate Resolutions 2010
Sure you can lose weight, get in shape, launch a business or find a new job. But haven't you also procrastinated long enough about buying a home?
How long has it been since you upgraded your home with a new roof, spiffed up landscaping or pulled some other home improvement?
And that post-World War II ranch home of yours could certainly use a few energy efficient do-overs.
Look to low mortgage interest rates, bargain home prices and other favorable market conditions to give you the resolve to consider home sweet home in your list of must-dos next year.
Join the nearly 18 percent of Americans who say they've resolved to become a first-time homebuyer in 2010, according to a new Move.com survey. That's both a smart move and a timely one. Mortgage rates are at record lows, prices are down and the $8,000 first-time home buyer tax credit has been extended until April 30, 2010. It's also been expanded to include a $6,500 tax credit to move-up buyers.
More than 15 percent of those who responded to the survey said saving money to purchase a new home is their top real estate resolution for the New Year. Resolve with them to learn the best way to budget, plan ahead and save money.
Nearly 40 percent say No. 1 on their list of resolutions is starting a home improvement project. Cheap home equity money should help them not only start, but also complete the job.
The Move.com survey also found 9.1 percent most wanted to fix their credit so they can buy a home next year. To get started all you need to do is take a look at your next credit card statement for a toll free number directing you to counseling help. That's part of the new, but little-known mandated disclosure provisions in the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act).
Nearly 16 percent are wisely considering buying an investment property as their top resolution. They couldn't have picked a better time in the last half decade.
Another Move.com survey recently found more than 12 percent of homebuyers today plan to purchase a home as an investment, compared to less than half, only 5.6 percent, just seven months ago, thanks to more attractive investment conditions.
"If you anticipate inflationary conditions in the future, investment property could be a good bet to hedge against it," said Nancy Osborne, chief operating officer of Erate.com, a Santa Clara, CA-based financial information publisher and interest rate tracker.
This article was published in Realty Times
Written by: Broderick Perkins
Thinking about Buying or Selling?
Call Alvin's Team Today! 800-666-4718
Or visit our website: www.LivingLakeTahoe.com
How long has it been since you upgraded your home with a new roof, spiffed up landscaping or pulled some other home improvement?
And that post-World War II ranch home of yours could certainly use a few energy efficient do-overs.
Look to low mortgage interest rates, bargain home prices and other favorable market conditions to give you the resolve to consider home sweet home in your list of must-dos next year.
Join the nearly 18 percent of Americans who say they've resolved to become a first-time homebuyer in 2010, according to a new Move.com survey. That's both a smart move and a timely one. Mortgage rates are at record lows, prices are down and the $8,000 first-time home buyer tax credit has been extended until April 30, 2010. It's also been expanded to include a $6,500 tax credit to move-up buyers.
More than 15 percent of those who responded to the survey said saving money to purchase a new home is their top real estate resolution for the New Year. Resolve with them to learn the best way to budget, plan ahead and save money.
Nearly 40 percent say No. 1 on their list of resolutions is starting a home improvement project. Cheap home equity money should help them not only start, but also complete the job.
The Move.com survey also found 9.1 percent most wanted to fix their credit so they can buy a home next year. To get started all you need to do is take a look at your next credit card statement for a toll free number directing you to counseling help. That's part of the new, but little-known mandated disclosure provisions in the Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act).
Nearly 16 percent are wisely considering buying an investment property as their top resolution. They couldn't have picked a better time in the last half decade.
Another Move.com survey recently found more than 12 percent of homebuyers today plan to purchase a home as an investment, compared to less than half, only 5.6 percent, just seven months ago, thanks to more attractive investment conditions.
"If you anticipate inflationary conditions in the future, investment property could be a good bet to hedge against it," said Nancy Osborne, chief operating officer of Erate.com, a Santa Clara, CA-based financial information publisher and interest rate tracker.
This article was published in Realty Times
Written by: Broderick Perkins
Thinking about Buying or Selling?
Call Alvin's Team Today! 800-666-4718
Or visit our website: www.LivingLakeTahoe.com
Wednesday, January 6, 2010
Real Estate Outlook: 2010 Stark Contrast to 2009
Even the grumpiest, grinchiest economist would have to admit that New Year's 2010 looks a whole lot more positive for real estate and housing than things did last year at the same time.
You may remember that dark and scary time. We had just come through the Wall Street financial panic, but it wasn't yet clear what the federal government could - or would - be able to do to prevent a total collapse.
The outlook right now is a complete contrast: Home sales have been rising for months, thanks in part to the federal tax credit programs; new home starts and permits are up in most parts of the country; and prices generally are trending up in most of the markets that got shell-shocked in the bust.
Now new market data from last week point to continued growth just ahead, but with an ominous warning sign as well.
The latest pricing numbers released by the Federal Housing Finance Agency found home values nationwide up modestly in the latest month -- by six tenths of a percent. That sounds really small, but annualized it comes to more than seven percent, which is not bad at all.
And recent sales results from key local markets also are encouraging. For example, in November, every major metropolitan area in Florida saw sales of houses and condos up compared with the year before for the second straight month.
Overall, according to the Florida Association of Realtors, sales of houses were 61 percent higher than November of 2008. Condo sales were up by an amazing 111 percent!!
Plus consumer confidence has been trending upward nationally, by 7.5 percent during December, according to the University of Michigan's bellwether survey.
But now to a sobering subject: Mortgage money is getting more expensive, week after week. At least one big player in the market -- Freddie Mac -- is projecting rates to move from just over five percent today for 30-year loans to 6 percent or higher later in 2010.
Freddie Mac's deputy chief economist, Amy Crews Cutts, says the Federal Reserve's scheduled phase-down of its multi-billion dollar purchases of mortgage backed securities, plus expected moderate growth in the economy, will force rates at least a percentage point higher.
Mark Zandi, chief economist for Moody's Economy.com, agrees. He said last week that six percent for mortgages "sounds about right. I don't think there's any question rates are headed up."
Bottom line here: If you or your clients care about rates, nail down financing sooner, not later. It could cost you if you wait.
Published in Realty Times
Written by Kenneth R. Harney
January 5, 2010
Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com
Monday, January 4, 2010
December Round Up: Rates Still at Incredibly Low Levels
In Freddie Mac's results of its Primary Mortgage Market Survey, the 30-year fixed-rate mortgage (FRM) averaged 5.05 percent with an average 0.7 point for the week ending December 24, 2009, up from the previous week when it averaged 4.94 percent. Last year at this time, the 30-year FRM averaged 5.14 percent.
The 15-year FRM this week averaged 4.45 percent with an average 0.6 point, up from the previous week when it averaged 4.38 percent. A year ago at this time, the 15-year FRM averaged 4.91 percent.
The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 4.40 percent this week, with an average 0.6 point, up from the previous week when it averaged 4.37 percent. A year ago, the 5-year ARM averaged 5.49 percent.
The 1-year Treasury-indexed ARM averaged 4.38 percent this week with an average 0.6 point, up from the previous week when it averaged 4.34 percent. At this time last year, the 1-year ARM averaged 4.95 percent.
"Although interest rates for 30-year fixed-rate mortgages are above 5 percent this week for the first time since the end of October, they are still around 0.5 percentage points below this year's peak set in mid-June," said Frank Nothaft, Freddie Mac vice president and chief economist. "ARM rates increased by a lesser amount as the market consensus calls for no rate hikes by the Federal Reserve in the immediate future.
"Meanwhile, the housing market continues to show improvement. Total existing home sales jumped 7.4 percent in November to an annualized pace of 6.54 million units, which was the most since February 2007. Moreover, the number of unsold existing homes was the lowest since December 2006 and the number of unsold new homes was the least since April 1971, which may leave future room for new construction."
IRS Clarifies Home Buyer Tax Credit Ambiguities
The IRS has clarified its position on two scenarios that have arisen with the extension of the first-time home buyer tax credit and creation of the new repeat home buyer tax credit.
With the addition of the second tax credit, there may now be a situation in which two unmarried buyers purchase a residence together where one qualifies for the $6,500 repeat buyer credit and the other qualifies for the $8,000 first-time home buyer credit. According to the IRS, they must allocate the tax credit in a meaningful manner.
The repeat buyer cannot receive a tax credit higher than $6,500 and the total amount claimed by both buyers cannot exceed $8,000.
For example, the repeat home buyer could claim $6,500 and the first-time home buyer could claim $1,500. Alternatively, both buyers could claim a $4,000 tax credit.
The second scenario involves the qualification status of married purchasers as repeat home buyers. In order to qualify for the repeat buyer tax credit, both individuals must have lived in the same residence for five consecutive years out of the last eight.
If one spouse has lived in the house for five years and the other moved in later, after they were married, then they are both excluded from the repeat buyer tax credit.
How Can You Tell If You Are In a Buyer's Market?
Markets operate on the basis of supply and demand. If you have a local market where the supply of homes is significantly greater than demand, you will have a market where home sales slow, prices stall or drop, properties are more affordable and purchasers are typically able to negotiate significant concessions from sellers. And that, in a nutshell, is a buyers market.
Today many local markets favor purchasers. No less important, interest rates are at the lower end of the scale on an historic basis, and you can do well with conservative, reasonable financing such as FHA, VA and conventional loans. Relative to the past few years, now is a good time to buy in many areas.
Exterior Remodeling Proves Best Bang for Your Buck
Results from the 2009 Remodeling Cost vs. Value Report show that small-scale exterior projects are the most profitable at resale, according to estimates by Realtors® who completed a recent survey.
On a national level, eight out of the top 10 projects in terms of costs recouped were exterior replacement projects that cost less than $14,000. Certain types of door and siding replacements, as well as wood deck additions all returned more than 80 percent of project costs upon resale. A steel entry door replacement recouped 128.9 percent of costs, followed by upscale fiber-cement sliding replacements at 83.6 percent. Wood deck additions recouped 80.6 percent of costs.
This article was published in Realty Times
Written by Realty Times Staff
Thinking about Buying or Selling?
Call Alvin's Team Today! 800-666-4718
Or visit our website: www.LivingLakeTahoe.com
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