New Short Sale Bill Submitted to Congress

U.S. Representative Robert Andrews (D-N.J.) and Tom Rooney (R-Fla) offered up new legislation to Congress last week. H.R. 6133, "Prompt Decision for Qualification of Short Sale Act of 2010," is an effort from Congress to help keep potential buyers from walking away from short sales, simply because lenders take months to respond to their offers.

The National Association of REALTORS are a strong supporter of the bill. Their President, Vicki Cox Golder, said, "The short sale, which requires lender approval, is an important instrument for homeowners who owe more than their home is worth. While the lending community has worked to improve the size and training of their short sales staffs, they still have a long way to go on improving response times."

And in a sticky financial situation such as a short sale, where time really counts, this bill comes as welcome news to many homeowners and buyers.

This legislation aims to "require the lender or servicer of a home mortgage, upon a request by the homeowner for a short sale, to make a prompt decision whether to allow the sale." (Library of Congress)

In this bill, the terms "short sale" means the sale of the dwelling or residential real property that is subject to the mortgage, deed or trust, or other security interest that secures a residential mortgage loan that:

*will result in proceeds in an amount that is less than the remaining amount dueunder the mortgage loan; and
*requires authorization by the securitization vehicle or other investment vehicle or holder of the mortgage loan, or the servicer acting on behalf of such a vehicle or holder.

Ms. Golder continued, "Unfortunately, homeowners who need to execute a short sale are severely hampered because lenders (loan servicers) are unable to decide whether to approve a short sale within a reasonable amount of time. Potential homebuyers are walking away from purchasing short sale property because the lender has taken many months and still not responded to their request for an approval of a proposed short sale price. Many consumers have mentioned that the delay in short sale price approval exceeds 90 days, and in many cases never arrives."

Hopefully, if this bill passes into law, homeowners will find relief from their mortgage woes, and will be able to sell their home without having to be foreclosed upon.

Written by Carla Hill

September 28, 2010 Published on Realty Times

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Tools for New Homeowners

Living in a condo or a rental unit comes with one definite perk. You don't have to make your own repairs!

Now that you have moved into your new home, it's time to put on a new hat, that of "handyman." For the big jobs, like roofing and rewiring, you'll more than likely still rely on a professional. And unless you are truly versed in those specialties, that is what we'd recommend!

But there will be many small jobs that come up which you will be able to fix on your own. Really! Not only will it save you money, but you'll experience a nice swelling of pride that you made whatever it was, work again. To complete those jobs, you'll need tools.

So, what tools will you need as a new homeowner? Here is a list of suggestions from our experts:

1. A toolbox. There is nothing more tiring than having to search for the tool you need. Is the screwdriver in that box under the sink or in the garage? Where do we keep the extra screws? Keep everything together and you'll never waste time hunting for the right tool.

2. Hammer. It seems basic enough, and it is. If for nothing else, you'll need it to hang all your artwork and pictures.

3. Level. From hanging pictures to framing a garage, a level is a must for any handyman.

4. Screw Driver. You'll need more than one! Be sure you have multiple sizes of both phillips-head and flat-blades.

5. Plyers. Have you ever tried to disconnect a fitting on a pipe? You need plyers.

6. Hand Saw. Many handymen prefer power tools, but for those remote spots with no electrical access, you can always count on a hand saw.

7. Tape Measure. How long does that new counter-top need to be? Do we have room for the couch to fit through the front door? Exactly. Use a tape measure.

8. Wire cutters. For what else? To cut wires!

9. Cordless, Reversible Drill and Bits. It's perfect for the ladies that need a little extra oomph to finish a project.

10. Utility Knife. This is great for cutting exact edges.

11. Vice/clamps. Connect a vice to your workbench and use it to stabilize items you are cutting.

This is just a starter kit. There is a tool for practically every need, so over time, your tool box will grow considerably!

Rely on the tool experts at your local home improvement stores, as well. They have been trained to help you find your way. If you are unsure what exact tool you need or how to use it, don't be afraid to ask.

Becoming your own handyman is a learning process, so don't be too hard on yourself. There will be a lot of trial and error. That's half the fun. Enjoy your new home! 


Written by Carla Hill. Published on Realty Times. 
September 29, 2010 

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Buyers Advice: Housing Affordability

You may be asking yourself, "Is now a good time to buy?" It's a very important question. As a buyer, you're concerned with getting the best deal possible. Will you be buying at the top of the market? Or will you purchase when the market is in favor of you, the buyer?

According to the National Association of Home Builders (NAHB) and their Home Builders/Wells Fargo Housing Opportunity Index (HOI), affordability is high for the 5th consecutive quarter.

How is affordability calculated? In general terms, if housing costs don't exceed 30 percent of the monthly household income, then it meets the standards. Anything more than 35 percent is too high.

"Today’s report is very encouraging because it indicates that homeownership continues its more than year-long trend of remaining within reach of more households than it has for almost two decades," said NAHB Chairman Bob Jones, a home builder from Bloomfield Hills, Mich. "With interest rates still hovering at low levels, companies starting to hire new employees and the economy beginning to rebound, this should encourage more home buyers to enter the market and help further stabilize housing and the economy."

The HOI indicates that 72.2 percent of all new and existing homes sold in the first quarter of this year were affordable to families earning the national median income of $63,800.

Some of the best markets for affordability is:

• Syracuse, New York

• Dayton, Ohio

• Grand Rapids-Wyoming, Michigan

• Indianapolis, Indiana

• Youngstown, Ohio, and

• Bay City, Michigan

Of course, affordability, like most aspects of the housing market, is a local issue. The local economy has a direct effect on home prices, market favor (buyers or sellers), and the like.

Take for example, New York-White Plains-Wayne, New York-New Jersey. The NAHB says this region continued to lead the nation in poor affordability. Less than 21 percent of all homes sold in the 1st quarter 2010 were affordable.

Other markets where affordability is low:

• San Francisco, California

• Honolulu, Hawaii

• Santa Ana-Anaheim-Irvine, California, and

• Los Angeles-Long Beach-Redwood City, California

Be sure to talk to your local REALTOR® about where your local market fits into the affordability equation. 


Written by Carla L. Davis. Published on Realty Times

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30-Year Fixed Mortgage Rates Sitting Still

Mortgage-backed securities prices, which drive mortgage interest rates in the opposite direction, continue to perform well even as the economy officially pulls out of the recession. As a result, 30-year fixed mortgage rates remain near all time record lows, at 4.125% for well-qualified consumers with a 20% down payment who pay 1 point origination. 15-year fixed mortgage rates are at 3.625%, an 1/8 off their record low. Both fixed mortgage rates were verified by FreeRateUpdate.com research of over 2 dozen wholesale lenders' rate sheets for brokers.

FHA loan rates continue to match conforming mortgage rates for the most part. Today's 30-year fixed FHA loan rate is 4.125% for well-qualified borrowers, the same as today's conforming 30-year fixed rate; however, MI and other FHA fees make closing costs significantly higher than that of a conforming mortgage at the same note rate and origination.

Jumbo mortgage rates are unchanged and haven't budged in weeks. Today's 30-year fixed jumbo loan rate is 5.125%

Wells Fargo, the nation's number one originator of conventional mortgages today, is advertising a 30-year fixed rate of 4.375%, with an APR of 4.559%, on their website.

Today's Mortgage Rates - Available to well-qualified consumers with a 20% down payment who pay about 1 point origination.

Conforming

• 30-year fixed: 4.125%

• 15-year fixed: 3.625%

• 5/1 ARM: 3.250%

FHA

• 30-year fixed: 4.125%

• 15-year fixed: 3.750%

• 5/1 ARM: 3.000%

Jumbo

• 30-year fixed: 5.125%

Written by Ed Ferrara
September 22, 2010 Published on Realty Times

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First-Time Buyers Find a House

Buying a home is an exciting experience. For first time buyers new to the process, it can also be terrifying. In order to ease buying jitters, take a look at a few simple tips.

At the beginning of this journey, you'll need to decide on a budget. There are several factors you need to keep in mind. First, how much of a downpayment do you have? FHA loans allow for as little as 3.5 percent of the purchase price as a downpayment. Other lenders generally require a higher percentage.

Do you want to be house rich and cash poor? Just because a lender approves you for a mortgage payment of $200,000 at $2,000 a month, doesn't mean you want to spend that. It may leave you with no money left over for travel, entertainment, or other luxuries you have come to enjoy. Thus comes the saying, "house rich, cash poor."

To find out what a lender thinks you can afford, you will need to get pre-approved. The lender will examine your financial status, including your credit score. This will determine what interest rate you'll be offered and for what amount you are approved.

After setting your budget, you'll need to pick the neighborhoods you are interested in. Are you looking for a short commute, good schools, entertainment within walking distance, or an old neighborhood with charm? These preferences are entirely up to you and will determine the direction of your search.

The MLS is a great place to start your search. The real estate agent you are working with can help you weed through the thousands of listings by supplying you with potential matches, or a simple google search on your own can give you a list of MLS sites to search. Realtor.com also features a MLS that is open to the public. The MLS shows pictures, descriptions, and locations of homes that match your search criteria.

Use the MLS to narrow down potential neighborhoods. It can be a good starting point to give you an idea of costs, amenities, and size of homes.

As you begin your home search, your local real estate agent will let you know of upcoming open houses. An open house is generally held on a weekend and means the listed home will be open for you to view. There will be other potential buyers there, as well as their agents.

A showing, on the other hand, is when your agent and the listing agent agree upon a set upon time for you to view the house. The seller will not be present, and you'll have the house all to yourself.

Good luck with your home search, and may you find your dream home. 


Written by Carla Hill
September 22, 2010 Published on Realty Times

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First-time Buyer ABC's

As a first-time buyer, you have a lot of questions. There is terminology you don't understand. And there are expenses you need to anticipate. Here are some explanations of just that, to help you on your way to homeownership.

First, what costs should you expect? After you have become "pre-approved" for a mortgage, you will know how much you can spend (aka your "budget"). Pre-approval is done by the bank or lender who will be writing your mortgage. It is accessed by your: credit history, assets, employment history, and financial status. And it guarantees you a loan.

Being pre-approved can quicken the time it takes to close, as well as give you an advantage over buyers who are not pre-approved, should a home garner multiple offers.

Next, figure out how much money you'll need to put down. Are you looking at an FHA loan with 3.5 percent down? Or are you planning on putting 15 to 20 percent down? Financial expert Suze Orman recommends that in today's troubled market, you put at least 20 percent down on a house.

Closing costs are what are paid, well, at closing. You should expect to pay for an appraisal, title services, title insurance, transfer taxes, inspections, loan origination, private mortgage insurance, and homeowners insurance, among a host of other charges. The average closing costs are paid, yes, by the buyer. And they average around 2 to 4 percent of the total purchase price of the home. You can, of course, negotiate payment of closing costs with the seller. This is especially true in a market which favors buyers.

What is mortgage insurance? Mortgage insurance, also known as private mortgage insurance (PMI), protects your lender, should you default on your loan. And it can be required when you have made only a small downpayment. It costs around 1 percent of the total loan. According to the Federal Reserve Bank of San Francisco, "Under [The Homeowner's Protection Act of 1998], mortgage lenders or servicers must automatically cancel PMI coverage on most loans, once you pay down your mortgage to 78 percent of the value if you are current on your loan."

What is escrow? With a purchase as large as this, it is important that one party doesn't run off with all the funds! This is where an escrow account comes into play. All necessary and agreed upon funds are put into a third party account. When all terms have been met, then the funds are released to the appropriate parties.

What is an offer? When you have found a home you like, you'll discuss with your agent what a reasonable price pay is. This will more than likely be less than the price the seller is asking. And it will be based on the condition of the home, the price of home's in the neighborhood, as well as current market conditions. Remember, your offer is the price you are willing to pay for the property. You have signed the offer and, if accepted, you will be expected to follow through with the purchase of this home!

What are property taxes? Welcome to homeownership! Property taxes are paid each year to your local government at the county level. Some areas of the country charge much higher taxes than others, and the price is a percentage of the value of your property. That means that more expensive the house, the more expensive the taxes.

As a first-time buyer, it is highly recommended you work with a local real estate agent. They not only can answer any questions you may have, but their wealth of knowledge and experience will help guide you in a positive direction for this important transaction. 


Written by Carla Hill
September 16, 2010 Published on Realty Times

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Stand Out in a Buyers' Market

My recent tour of the shores of southern British Columbia's Okanagan Lake revealed a wide selection of waterfront and community-adjacent rural properties sporting "For Sale" signs. How do sellers fare when there are two, three, or more listing signs visible on their street, along their stretch of shoreline, or in their condominium complex?

Sellers who have kept up their property, and continually modernized their house or condominium are well prepared for competition. Understanding current market conditions and presenting a property to showcase its unique real estate value are the skills that real estate professionals excel at. The right team, with the right attitude and marketing strategies, will captivate buyers who are actively searching, and stimulate interest in the indecisive.

During the boom, the limited number of available listings in this popular winery-dotted sun spot were hot items—a common story across Canada. Now, the OkanaganValley is a buyer's delight. More listings to chose from means more buyers can locate that special property which reflects their unique needs. Important financial and lifestyle decisions can be made at a more realistic pace, and buyers have time to learn about their new community before they jump in. In some neighbourhoods, and for some property types, prices have reversed their upward trend, bringing out-of-reach real estate within reach. Great for buyers, but unsettling for sellers who fondly recall the last boom.

Setting a market-accurate listing price may not be enough to ensure a sale when there's lots of choice. Every aspect of property value must be presented using every available communication technique:

• Drive-by shopping remains a powerful selling strategy. This makes the curb in front of a property the true real estate marketplace.

• If there is a real estate "For Sale" sign on the property, make sure phone numbers and other contact information are easily read on a drive-by. A clean, vertical sign is "the silent salesman", so make sure it does its job.

• Real estate marketing strategies employed by listing brokers and salespeople do not merely involve sticking a sign on the lawn and an ad in the local paper, then hold an open house or two. Internet marketing extends communication reach and presents the true value of a house, cottage, or condominium in full colour, depth, and detail. Agent-to-agent marketing is invaluable when buyers are searching out that special property. Listing salespeople know the value of following-up with the real estate professionals who show the listed home. Contacting those with similar listings and, therefore, prospective buyers with relevant interest, can be particularly productive.

• Clean sells, inside and out. Be extreme. Hose the dust, spider webs, and bird droppings off road-side bushes and fencing. Prune unruly trees to reveal the house. Refresh potted plants with bright, full-bloom versions for "stop and look" appeal. Polish brass door hardware. Power wash decks, driveways, siding…anything that does not look brand new.

• Maintenance matters. Paint what needs to be painted. Fix what is not 100% perfect. Spruce up the driveway with fresh asphalt coating or extra gravel. Manicure the lawn. Weed and compost flower beds after edging them.

• Cut the clutter. Put out garbage cans just before collection and remove them immediately. Keep them sparkly clean, too. Remove all toys, bikes, broken patio furniture, and cars. Park down the street and keep the view clear for potential buyers.

• Make it easy for buyers to learn what's inside. Ask your listing salesperson to post Feature Sheets in an outdoor water-proof display holder. This will encourage buyers to stop for a closer look and to collect full details on the property. This accessible profile, coupled with agent contact information, may stimulate a cell call for a viewing. Post up-coming open house dates and times for convenience, and to emphasize that the home is actively marketed.

• How is cell phone and internet access to listing information made easy for drive-by prospective buyers? Don't rely on your listing salesperson knowing every tech option in continually-changing mobile computing. What can you discover?

• Ignoring other listings is not a strategy. Ask your listing salesperson about the value in a joint open house or advertising ventures with the other listings. This can be effective when the location is a special one. If your property is priced for value (that's not automatically having the lowest price) and shows well, your home may benefit from deliberate comparison. Buyers compare your home to others and will probably want to see the neighbouring listings anyway. A higher advertising profile for your location may draw buyers into this "hot" area. When buyers call for information on any listing in the area, there is always potential for them to be directed to your listing.

• Tightened mortgage lending practices may limit buying in some regions, but experienced real estate and mortgage brokers know how to present the best financial options for all concerned. Sellers who work with these professionals to ensure no-hitch financing in an attractive package can stand out in a crowd of listings. Sellers who offer back-up financing like a low-interest or no-interest second mortgage may discover their net return is very attractive. Since properly-designed mortgages can be sold, this strategy does not necessarily tie a seller down financially.

• Offering a higher selling commission may be a useful strategy to discuss with your listing salesperson.

• Discuss procedure with your listing salesperson in case a buyer knocks directly on your front door asking for a viewing. Be prepared to react in a professional manner that will encourage the buyer. There are special skills involved in showing a property and generating an offer to purchase. If you lack these skills, personally showing prospects your home may be counterproductive.

Sellers can find that "living in a listing" is a stressful experience. Experience has proven that you'll be the loser if you spend more time whining about the inconvenience, than keeping your real estate in "buyer ready" mode. 


Written by PJ Wade
August 24, 2010 Published on Realty Times

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How Buyers Compete in a Sellers' Market

No matter the market, sellers can find a competitive edge, whether it be through pricing, staging, or even negotiating closing costs.

What about buyers? Do they have any hope for an edge during a sellers market?

A sellers market is one which favors the seller. Perhaps you find yourself in a hot area where homes garner multiple offers and bidding wars. Or perhaps you live in an area where prices are appreciating or there is only a small inventory of homes for sale. No matter the situation, buyers can still find ways to gain an advantage.

Here are a few tips that might do just that.

1. Pre-approval: Be sure to start your home buying process by getting pre-approved for a mortgage. This will prove to your potential seller that you are ready, willing, and able to buy their home. A pre-approval will also give you an exact number of how much money you can borrow, and thus spend.

2. Be ready to buy: There can be no hesitation during a sellers market. There will be other buyers waiting to to grab up the same deal you just found. If the numbers work out in your favor for a home you like, then be ready to put in a strong offer.

3. Know your budget: You may be approved for a loan of up to $300,000, but you only want to spend $250,000 as your max. Be sure to know ahead of time what your budget really is.

4. Make a strong offer: In a sellers market, homes can expect to receive nearly if not all of their asking price. And in many cases, you may even find a home sells for more than the asking price. So, in order to make both a good impression on the seller so they take your interest seriously, as well as to beat out the competition, be sure to present a strong first offer.

5. We willing to negotiate terms: This means if a seller needs 60 days until closing, do what you can do accommodate them. Or maybe they are unwilling to make a repair before you move in, but are willing to pay you the repair costs instead. Be willing to work with a seller, if it means getting the home you desire.

These simple tips can make a big difference when it comes to buying in a sellers market. 


Written by Carla Hill
September 13, 2010 Published on Realty Times

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Home Buying Secrets for the 'Average Joe'

New York City attorney Edward A. Mermelstein is, well, a big shot in the Big Apple -- but he hasn't forgotten the little guy.

Co-founder of the international, multilingual (11 languages) real estate law firm Edward A. Mermelstein & Associates, he's also got an office in Moscow and offers legal services to financial and real estate institutions, including representation for international transactions, business litigation, dispute resolution and insurance matters.

Clients include international conglomerates, start-up ventures and entrepreneurs, multi-national corporations, land charitable organizations, government officials and others, but he also offers insight for the 'Average Joe' -- home buyers who need all the help they can get right now.

Mermelstein's "Home Buying Secrets for the Average Joe" are a timely example of his insight for buyers.

• Study - Do your homework before you buy. Review the prices of comparable homes in the neighborhood, which can be found on websites such as Zillow.com, PropertyShark.com, StreetEasy.com, HouseValues.com, Trulia.com and others. Keep in mind these numbers sometimes trail the market by several months. A real estate agent can provide the latest sales data.

• Cure your credit - Today's best mortgage rates require a credit score of more than 700. Learn how to boost your credit score before you apply for a mortgage. Not only will a low credit score cost you more in terms of the interest rate on your mortgage, it could also prevent you from obtaining a mortgage.

Go to AnnualCreditReport.com, the only federal government-sanctioned service for obtaining a truly free credit report from one or all three of the major credit bureaus. On AnnualCreditReport.com, select your state and hit the red "Request Report" button and follow the instructions. The report is free, but you will have to pay a nominal fee to get your credit score.

• Bid low - In many of today's buyers' markets you can offer 10 to 15 percent below the list price because prices are based on contracts signed three to four months ago. List prices don't necessarily reflect the most current values, especially in markets still on the decline, according to Mermelstein.

• Consider a 'Lucky 7' loan - Take advantage of the lower interest rates available with a 7/1 adjustable rate mortgage (ARM), when compared to a fixed-rate 30 year mortgage. The interest rate on a 7/1 ARM is fixed for seven years. In the eighth year the loan resets as an ARM. Just be sure you know what the margin, life cap and periodic caps will be beginning in the eighth year to avoid surprises. Use those seven years to reduce debit and increase your income in preparation for what is likely to be a much higher rate than your starting rate.

Mermelstein also says to consider 30/15 year mortgages which are fixed for 15 years, amortized over 30 years and due in full in 15 years.

These and other mortgage options come with lower starting rates as a hedge against interest rates rising in the near future.

• Get pre-approved - Go beyond prequalifying for a mortgage, which only tells you what you can likely borrow. Get a pre-approved mortgage and you'll know your home price shopping parameters. You'll also present yourself to the seller as a serious buyer. Financing in hand will also help level the playing field with all-cash buyers and investors and it will help you negotiate a better purchase price.

• Consider a newly built home - The new home sector has been harder hit than resales. Concessions and reduced prices are the norm. The latest U.S. Census Bureau data reveal that sales of new homes fell for the fourth consecutive month in February, to a seasonally adjusted annual level of 308,000 sales - a year-over-year decline of 13 percent and the lowest level ever. Just be sure to check out the reputation of the builder.

• Inspect everything - Get a home inspection for a new home, a resale home, a nearly new home or a very old home. Always. Just because it's new doesn't mean it's defect free. Hidden problems can torpedo the value of your home.

• Read the title report - Make sure that any new additions or construction to an existing home are fully permitted and recorded with the local municipality.

• Check the appraisal - Likewise check the appraisal report for any oversights, missed features or other errors that could cause the property to be undervalued.

• Negotiate - Don't be afraid to dicker. It's a buyers' market. Concessions are available from both new home builders and existing home sellers. Ask for help with the closing costs, repairs, even furnishings and other perks. Motivated sellers have much to offer.

• Don't skimp on the help - If you look for the least expensive attorney, real estate agent, inspector, etc., you will get what you pay for. Ask family, friends, co-workers, realty professionals and others you trust for referrals and then carefully vet them. 


Written by Broderick Perkins
May 13, 2010 Published on Realty Times  

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Ask the HOA Expert

Question: The board is thinking about circulating a survey to evaluate the manager company’s effectiveness. Any suggestions?

Answer: Since the majority of owners are disconnected from the day to day HOA business and have little understanding of the manager’s scope of work, most would not have an informed basis for evaluating the manager’s effectiveness.

An input form might be more effective. List the various tasks the HOA is responsible to perform in general categories like General Maintenance, Landscaping, Pool, Janitorial, Communications, Newsletters, Rules Enforcement, Financial Reporting etc. and ask for specific recommendations for improvement. If the suggestions are directly related to things the manager should be taking care of, the board has something concrete to discuss about job performance.

Question: The Regenesis.net HOA Websites section includes "HOA Website Recommended Content & Layout". One of the criteria states "No password protection except for member information." Why would the HOA not want to password protect certain information like the Reserve Study or the financial statements?

Answer: Concealing (password protecting) information that an informed buyer needs to know is a major weakness of the HOA system. There are few business matters that an HOA should concealed from potential buyers. The budget and reserve study are definitely high on the list of things to disclose. Protecting individual owner privacy is another matter and should be respected.

Question: Can we publish the complete list of what each HOA employee makes or is this a breach of privacy?

Answer: Disclosing this kind of information could create animosity between employees or prompt interference from members who feel someone is paid too much or too little. It is something the board should keep confidential. It is appropriate, however, to disclose the total amount of wages/salaries paid in the annual budget.

Question: During a week of 100 degree weather recently, I asked permission from the board to install a window air conditioner. I was denied. I read the governing documents and rules and window A/C units are not mentioned.

My son has a rare disease and a compromised immunize system. His doctor has recommended carefully controlled temperatures (not too hot and not too cold). I can control the cold part but need A/C to control excessive heat. Shouldn’t I be able to get an exception due to health reasons? I don't want to have to pay his doctor to write a letter to the board.

Answer: The board should make a reasonable accommodation for this purpose. You should ask your doctor to provide a letter at no charge explaining the need for it so the board has the ammunition it needs to make an exception to the rule.

For more innovative homeowner association management strategies, seeRegenesis.net 

Written by Richard Thompson
September 8, 2010 Published on Realty Times

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American Savings

It's a trend that started decades ago. Even former President Jimmy Carter, in his 1979 "Malaise" speech, warned of its effects if Americans continued on their path.

He said, "In a nation that was proud of hard work, strong families, close-knit communities, and our faith in God, too many of us now tend to worship self-indulgence and consumption. Human identity is no longer defined by what one does, but by what one owns."

Yes, more than a handful of Americans are guilty of living beyond their means. The symptom of this fact was never more evident than during the recent onslaught of foreclosures during the recession.

Nowadays, the average American has 3.5 open credit cards, with an average household carrying credit card debt equaling $15,788 (Federal Reserve). And on that they pay an average of nearly 15 percent interest!

Just 20 years ago, comparative figures were practically inconsequential in comparison. The average family had just under $3,000 in credit card debt in 1990.

As a country as a whole we are inching towards the trillion dollar mark in credit card debt. Yes, trillion. The grand total as of March 2010 was $852.6 billion. Compare that to 1968 when consumer credit debt was $8 billion (in current dollars).

The current debt figures outlined above don't even begin to reflect the amount of debts we hold in non-revolving debt, such as car loans, mortgages, and student loans. It's a scary prospect for a nation that was once touted as the economic leader of the world. We are now a nation of debtors.

Is a change on the horizon for the United States? One positive that has come out of the recent recession is a slowly growing savings rate.

The New York Times reported on August 3, 2010, "A new government report released on Tuesday showed that consumers saved 6.4 percent of their after-tax income in June, and that this savings rate had shot up as high as 8.2 percent in May 2009. Before the recession, the rate had hovered at 1 to 2 percent for many years."

It may take a while to repair the damage that has been done by rampant over-spending, however. The New York Times continued that "along with high unemployment, high debt levels continue to discourage consumer spending. American households, though borrowing less, still are paying for their free-spending ways in the credit bubble of the mid-2000s. Their debt levels are far higher than they were in the 1980s and 1990s, when they had less than a dollar of debt for every dollar in disposable income."

Some economists fear that with a larger savings rate comes less consumer spending, something needed to reinvigorate an ailing economy. But in the long-run, a healthier savings rate may mean a stronger economic base for American households.

Financial experts give simple tips on how to start building your savings.

First, create a budget. Take a realistic look at your finances and develop a plan for making sure your monthly expenses do not exceed your income. This may take cutting out some extras that you have become accustomed to, but in reality can do without. If you can't afford to pay for an item without using credit, then you cannot afford it. It's as simple as that.

The same goes for buying items you don't need, instead of putting money into savings. The second simple step is to learn to identify the difference between wants and needs. You may want to have digital cable, but you could certainly survive without it. And even though you may be able to pay all of your bills without using credit, you might be living paycheck to paycheck. What can you do without?

Thirdly, be thankful. Gratitude is a wonderful start in adjusting your spending habits. Most Americans are blessed with a lifestyle and affluence that the majority of the world's population would envy. If your savings rate is anemic, then consider re-evaluating what you really need. Be thankful for the things that you have already in your life. And remember that possessions don't define you, and never will. 


Written by Carla Hill
August 31, 2010 Published on Realty Times

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Call Alvin's Team Today! 877-651-7810 
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Rural Housing Incentives

The landscape of American has changed over the years. As population levels grew, so changed rural and urban demographics. Cities have stretched their boundaries to include former farmlands, absorbing formerly rural populations. And young rural dwellers have made the leap to city life, as small American farms and a largely agrarian society has been replaced by industrialized farming and a service-focused job market.

According to the Census Bureau, a gradual shift has been taking place over the last 100 years.

• 1900: 39% urban dwellers

• 1920: 51% urban dwellers

• 1960: 63% urban dwellers

• 1980: 73% urban dwellers

• 2000: 79% urban dwellers

This rapid growth has changed the dynamics of our country. It has put further pressure on our environment and increased strains on local governments to provide education, health care, sanitation, security, and transportation.

The University of Michigan reports that "because governments have less revenue to spend on the basic upkeep of cities and the provision of services, cities have become areas of massive sprawl, serious environmental problems, and widespread poverty."

For those, however, who choose to live rural lives, numerous programs and incentives are in place that can make the process easier.

For example, if you are looking to connect to rural water sources, and you live in certain regions of Arizona, California, New Mexico, and Texas, you may be eligible for a grant that will pay for connecting service lines to a residence. It can also be used to pay utility hook-up fees, install plumbing and related fixtures, i.e. a bathroom sink, bathtub or shower, commode, kitchen sink, water heater, outside spigot, or bathroom, if lacking.

Looking to go green with a small business? The Rural Energy For America Program Grants/Renewable Energy Systems/Energy Efficiency Improvement Program provides grants for energy audits and renewable energy development assistance. It also provides funds to agricultural producers and rural small businesses to purchase and install renewable energy systems and make energy efficiency improvements.

Worried about qualifying for a home loan? The government has programs for that as well, whether you are an individual or builder. Considered "Guaranteed Housing," you can find such help as zero downpayment requirements and no maximum purchase price limit.

For more information on what grants, loans, and programs could be of help to you, contact your local rural housing office. 


Written by Carla Hill
September 1, 2010 Published on Realty Times

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Real Estate Outlook: Mixed Figures

With sharp drops in sales of existing and new homes plastered over the front pages and leading the nightly newscasts, it's no wonder the real estate doomsayers on Wall Street have been working overtime.

And there's no minimizing the bad numbers we've been seeing: A surprising 27 percent decline in resales from June to July, and a 12 percent drop in sales of newly-built houses during the same period.

Yes, most economists predicted that the months following the tax credits' expiration would be negative, so we were forewarned.

But let's not get caught in a Chicken Little economic trap here. Hidden among the recent negative numbers have been some positives that aren't getting much attention.

Start with home values. If families are going to buy houses, they've got to have confidence that the property will at least maintain market value and ideally gain a little over time.

Well, every major index put out recently by government agencies and private researchers has found home prices stable or appreciating in most areas of the country.

The Federal Housing Finance Agency's index, released last week, found home values up by about one percent during the second quarter of this year over the first quarter.

The National Association of Realtors' sales report for July found median prices up by seven tenths of one percent on average from the prior month - not a big deal for sure, but on the plus side, not negative.

Affordability is another key area where things have been slowly improving with little attention. The Wells Fargo-National Association of Home Builders "housing opportunity index" -- which looks at home prices, mortgage rates and what median-income families can afford to buy -- is at a near record high point.

Thanks to 30-year mortgage rates in the mid-four percent range, 72 .3 percent of median-income American families can now afford to buy the median-priced house. Historically that number has stayed in the low 60 percent range, and sometimes slipped below 50 percent.

That's great, you might say, but those families have not been buying lately even though they can afford to. Why?

Every consumer poll has the same conclusion: People are worried about unemployment -- potentially their own.

But now there might just be some modest good news just around the corner on jobs. Last week's new filings for unemployment benefits dropped by 6 percent - far beyond what most economists predicted and the first decline in weeks.

Bottom line: Don't be rattled by the rough patch of bad housing news we've been seeing. The fundamentals are in place for improvement once the economy begins generating new jobs again. 


Written by Kenneth R. Harney
August 30, 2010 

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Call Alvin's Team Today! 877-651-7810 
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