Choosing Your Neighborhood

Choosing a home is about more than just selecting a house. Every neighborhood offers its own unique set of people, activities, and amenities. Which neighborhood is the right fit?

Take a moment to review the following factors that can influence your decision on where to live.

The first consideration of many home buyers is the education of their children. From private, charter, and magnet to public school, there are a wide range of options. Public schools dictate enrollment according to school district boundaries. Keep this in mind when looking at new homes. You may be surprised to find where lines are drawn. Are you trying to move into a highly rated district or are you wanting to avoid uprooting your children? You may wish to visit area schools to get a feel for which place is best for your family.

Next, analyze the data on the local economy. Is there a high rate of long-term employment? It's always good news when new industries are moving into town rather than out of town. Home values should rise alongside demand. Dig a little deeper and find out what industries are holding steady, how long homes are sitting on the market, as well as your local unemployment rate.

Homeownership is at least partially about making an investment. Over time you hope to build equity in your home, allowing you to have not only a large asset, but also the ability to "move up". Be aware of foreclosed homes in neighborhoods, as they tend to pull values down. And understand that some neighborhoods offer higher rates of appreciation than others.

Are home values on the rise? In today's difficult market, many areas are experiencing depreciation. This is not the normal trend, but rather is the consequence of our recent recession. In general, homes increase in value by about 5 percent per year. Ask your local real estate agent for the stats on past appreciation rates.

An additional factor affecting home values is the condition of the prospective neighborhood. Be sure to drive up and down adjacent streets. Are homes and yards in good repair? You want neighborhoods that reflect care and attention.

Additionally, research the local crime rates. Some neighborhoods experience higher levels of crime, both violent and petty. Safety of your person and property are valid considerations when buying a home.

And finally, on a lighter note, entertainment options are another valid consideration for home buyers. From restaurants and parks to neighborhoods with high ratings of walkability, the choices abound. What works best for you? Are there certain stores, clubs, gyms, or churches that you frequent? Choosing a neighborhood means considering all the options. What do you need and want out of your next home?

Choose wisely and you'll end up with a home that fits you now and for years to come.


Written by Carla Hill
May 17, 2011, Published by Realty Times

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Power Saving For A Down Payment

Now more than ever, saving for a down payment is a crucial step to owning a home.

Right now on Capital Hill legislators, lobbyists, real estate industry experts and others are wrangling over Mortgage Reform and Anti-Predatory Lending Actprovisions in the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Among the most discussed provisions is one that would create a Qualified Residential Mortgage (QRM), one that will be viewed as a loan offering a lower risk of default.

Because of the low risk, borrowers who qualify for a QRM will pay less than for a mortgage that is not designated as a QRM, but it won't be easy to land the loan.

According to the proposed definition borrowers would have to:

• Put at least 20 percent down to buy a home.

• Have at least 25 percent in equity to refinance.

• Have at least 30 percent equity to do a cash-out refinance.

• Have house payments that don't exceed 28 percent of before-tax income, and total monthly debt payments (house, credit cards, auto, student loans) couldn't exceed 36 percent of before-tax income.

• Not have been 60 days delinquent on any debt payments in the last two years.

For many borrowers, the 20 percent down payment alone could be insurmountable -- without solid saving habits.

First you'll have to change your thinking. A down payment is much more than a quickly gathered percentage of the purchase price. It should be money you extract from existing savings, investments, assets or other savings gathered over time.

Even after you put money down, the lender will want to see that you have enough cash on hand to pay for homeowners insurance, property taxes, homeowner association dues and other costs of owning a home.

Here are some solid strategies to get you started.

• Create a budget. A budget doesn't just reveal where your money goes. It lets you see where you can cut back and divert money into savings.

• Organize. That's right. Sell all that stuff you never use. Sell all that stuff that won't be a good fit for your new home. Clear the clutter. An organized home, with everything in its place, is a time-saving home and time is money.

• Follow a routine. If your money is spent before you get it, you will be less likely to save. Have money deducted from your income and deposited in a savings account with the highest possible interest rate. Don't show favorites because your checking is with one bank. Shop around for Federal Deposit Insurance Corporation (FDIC) insured savings, certificates of deposit (CDs), money market funds, and other savings or investment vehicles.

• Hoard windfalls. Stop spending tax refunds, holiday cash gifts, small lottery winnings and other forms of unexpected money. Save them.

• Withhold less. If you do get a tax refund, it may be time to adjust the money withheld from your paycheck. A tax refund is a free loan to the government. It costs you lost interest it could have earned in a savings account. Adjust your W-4 accurately to reflect your true tax liability. Use the Internal Revenue Service'swithholding calculator to get it right.

• Cut back. Some debts are fixed. Others, including groceries, clothing, gifts, gasoline and utilities, are not. Brew your own coffee. Stop eating out. Drive to save gas. Buy generic brands. Get a better cell phone and cable TV plan. The list is endless.

• Dump credit. Likewise, don't live beyond your means. Save credit for emergencies only. Pay off debt. Reducing credit debt gives you money to save and it can boost your credit score.

• Liquidate assets. Saving for a home may be just the reason you've been looking for to unload model train, Beanie Baby, comic book, stamp or coin collections. What's collecting dust in your safety deposit box?

• Get a second job. A few extra hours a day, can earn you a few hundred dollars a month. Consider overtime at your present gig, flipping burgers, working retail during the holidays, working at home or otherwise finding an additional source of income solely for the purpose of saving for that down payment.


Written by Broderick Perkins
Published by Realty Times

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Are You Ready to Buy?

Making the move from renter to homeowner can be a big step. While homeownership comes with a lot of perks, it's also a huge financial responsibility. How do you know if you're ready to buy?

Are you ready for a more stable home? Rental rates vary year to year, and as a renter you are at the mercy of your apartment's management. Are they good at addressing problems, or are you left with a dwelling full of needed repairs.

Owning a home with a fixed-rate mortgage, the form of mortgage our experts recommend, means you know exactly what your monthly payment will be for the life of the loan. When a problem arises, you have the ability to fix it without having to jump through red management tape.

Stability goes further than just a fixed monthly payment. Studies have shown that owning a home brings stability to both your family (higher graduation rates, lower crime rates) and your community (more civic involvement). And you can't put a price on the privacy and space a home affords you. Single-family detached homes generally comes with yards and bigger square footage than apartments.

Now that you've thought about the dynamics of homeownership, it's time to consider the financial logistics. Does buying a home make financial sense right now? This answer depends on a few important factors.

First, do you have steady employment? There is no backup for making your payments. When you sign a mortgage loan, you are agreeing to make a payment every month. Do you expect your job to continue well into the future. If not, do you have marketable skills that are needed in today's economy?

Second, do you have an 8-month emergency fund? Savings and downpayment aren't enough to ensure security for your family. You must have at least 8-months worth of bill money saved away. If your monthly expenses add up to $3,000 a month, then you need $24,000 in an emergency fund that you don't touch.

Third, do you have good credit? Interest rates are at historic lows, but lending is tight. You must have an excellent credit score to get the best rates. And a sub-par credit score may have you sitting on the sidelines altogether.

Fourth, do you have savings for a downpayment? Financial experts recommend having at least 20 percent to put down. That means on a $200,000 house you'll need $40,000 for a downpayment. If you don't have the money, will family be contributing?

Consider these issues when you deciding whether or not now is the time to buy. If you have all your "ducks in a row," then now is a great time to buy.


Written by Carla Hill
May 4, 2011

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Competitive Tips for Buyers

Not every market is struggling. The truth is that many desirable neighborhoods and zipcodes are still experiencing healthy inventory levels and conditions that promote multiple offers. As a buyer in these markets, how can you be competitive?

First, and perhaps most importantly, be ready to buy. Readiness is not impulsiveness, however. Before you begin your home search, be clear on your objectives. This means knowing your budget (and how much wiggle room youreally have), what amenities are must-haves, and what things you can do without. By having a clear plan of action, you'll know a good deal when you see it and won't hesitate to act. Many would-be buyers miss out on their dream home because of hesitation. They need "the night to think about it" or "to see a few more" before they make a decision. If the home is a good price and in a desirable location, one night could mean missing out on the house altogether.

To take the preparation stage one step further, be absolutely sure you are pre-qualified and pre-approved for a loan. Do this before you even set foot in seller's house. Why? You wouldn't be the first buyer you puts in an offer on their dream home, only to find out financing has fallen through. Lending is tight right now. You may not qualify for as low of an interest rate as you would think. And for others, you may not qualify at all!

And if you were pre-qualified or approved months ago, be sure to stay in contact with your lender, so that there are no surprises when it comes time to make an offer.

Communication doesn't end there. Keep in contact with your agent about new listings and showings. Homes come on the market all the time, and in hot neighborhoods they don't last long. If you wait even a few days, a home could be scooped up by another eager buyer.

Next, bid competitively. This is where your agent can be invaluable. They have access to your market's stats, which show for how much comparable homes have been selling. This means you may be able to come in a little under list price and still be competitive, or it may mean that the property is already underpriced, and to beat out any other offers, you need to offer more than the asking price.

Competitive doesn't mean handing everything to the seller on a sliver platter, though. Sellers may ask for certain concessions, such closing costs terms, as-is purchases (without an inspection contingency in the offer), and requests regarding closing dates. Some of these requests may seem reasonable to you, but don't be afraid to stand your ground if others are too far-fetched.

And finally, stick to your guns. It can be easy to lose sight of your true end goal, which should be the home you love at a reasonable price. This means that your predetermined budget, well, it must remain your budget. Don't overpay for a house simply because you've gotten caught up in the excitement of a bidding war.

Use these simple tips to help you navigate a tough market. Before you know it you'll be signing on the dotted line for your new dream home.


Written by Carla Hill
Published by Realty Times

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Real Estate Investors: Understanding Your Options

For real estate investors, Chapter 11 can be a lifesaver - a proverbial "fresh start" from an otherwise seemingly impossible situation - which gives the debtor a respite from creditors. And, given the nature of the current economy and the challenges that confront major companies and individuals in the real estate industry, federal bankruptcy law is possibly a creative solution that can benefit real estate professionals, including: lenders, borrowers, developers, brokers, appraisers, accountants and other advisers. This point - that filing for bankruptcy is a beginning, not an end - bears repeating, because real estate investors deserve the right to work with experienced attorneys who understand this intricate area of law, a discipline that allows companies to often reemerge towards success.

First, the Bankruptcy Code can be a company's sole means of salvation. Hostess, The Los Angeles Dodgers, MGM, Blockbuster, and Trump Entertainment Resorts - all of these businesses have used bankruptcy as a way to regain balance and develop a blueprint for success. Bankruptcy can offer a precious commodity: time. For time gives the debtor the chance to reorganize its finances with a "breathing spell" from creditors.

Second, a bankruptcy filing gives a real estate investor flexibility. The debtor can design new financing for the bankruptcy court's consideration and approval. The judge has wide discretion to fashion a new and practical relationship between borrower and lender.

Third, with plunging real estate values, the debtor can call on the Bankruptcy Court for a "stripdown" of a lender's secured claim. For example: if an owner buys property for $1,000,000 and puts $300,000 down, the bank has a claim for $700,000 and is oversecured. When the property value falls to $600,000, the bank's claim of $700,000 is split into two parts, the secured part equal to the value of the property or $600,000.00, and the unsecured part, $100,000 that attaches to no collateral value. The debtor can generally pay a very small distribution on the $100,000, ,and go forward with easier debt service on the lower secured claim of $600,000. In turn, the lender has devices and procedures for its protection.

In a nation of property owners calling banks for "modification," a process in which the lender acts as a prosecutor and judge, and is so overwhelmed that it may lack the human resources to handle the flood of calls, the owner sees delay and uncertainty - which makes bankruptcy more compelling.

These points are not purely academic. Bankruptcy law - particularly for real estate investors - is of vital importance. A recent ruling underscores the complexity and ongoing development of bankruptcy issues. This case (Philadelphia Newspapers) upholds a debtor's efforts to prevent its secured lenders from credit bidding in connection with an auction held under a plan of reorganization. The economic effect of this legal development can be a benefit for borrowers and a challenge for secured lenders, especially in an era of commercial mortgage backed securities in which a consortium of lenders may not agree upon or be able to make a cash bid.

Real estate investors must be aware of the opportunities available through the Bankruptcy Code. Navigating this complex discipline depends on wise counsel and effective representation. To keep this ship afloat - to enable investors and companies to reach a more ideal destination - requires a thorough understanding of the obstacles (and opportunities) that define our current economy. With resolve and insight, real estate investors can use the Bankruptcy Code for their own improvement.

Written by Jerome S. Cohen - Opinion & Commentary
December 16, 2011, Published by Realty Times

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Why Owning a Home Rocks

Homeownership has been part of the American Dream for centuries, and it's no wonder why. It rocks.

First, owning a home is an investment. No, it's not a sure-fire way to get rich-quick. It is a long-term investment. Over the course of many years, even through times of economic upheaval, you can build wealth over time.

An average appreciation rate during normal times is around 6.5 percent a year. That means if you buy a home for $100,000, in just ten years you will have a home that could feasibly sell for around $174,000.

During that time you build equity, as well. Equity is the value of your property minus what you owe. So even if you still owe $60,000 on your home after 10 years, you will now have $114,000 in equity. Many homeowners use this equity to take out loans to use for home improvement projects, such as adding on new additions.

Owning a home also comes with less tangible benefits. Studies have shown that it creates a sense of community, motivating community involvement. And family stability is manifested through higher graduation rates and lower crime rates.

When you own a home, you take control of the creation of your surroundings. You can paint, make updates, and style the home to your liking -- all things not possible with most rentals.

You have even further stability when you have a fixed-rate mortgage. A fixed-rate means your rate will never increase. This means you will know the cost of your mortgage for the life of the loan. There won't be any surprises, which is what caught many homeowners off guard during the sub-prime mess. And there aren't any worries about the cost of rent going up each year. You can budget for life!

Don't forget about those great tax breaks, such as deducting your mortgage interest, and tax credits, such as money back for making energy efficient upgrades!

And of course, just think of all the fun times you can have with your family and friends. Memories will be made that will last a lifetime!


Written by Carla Hill
March 29, 2011

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Homeownership Still The American Dream, Fuels Economy

It's billed as the American Dream and yet for some it's been an all-time American nightmare.

Still "the home is central to American life" writes the National Association of Homebuilders in its report titled: Homeownership Works, released earlier this year.

Of course the report aims to show how housing is vital not just to homeowners but to the nation's growth. The publication looks at the contributions that homeownership make to the economy specifically through residential construction, remodeling, rental housing, and various other related aspects of the industry.

The publication shows how homeownership is a vital thread that weaves together a nation. It points to research released earlier this year by Pew Research Center Study, showing that 81% of of adults agree "that buying a home is the best long-term investment a person can make". The sentiment was mirrored by renters (also 81%) who reported they would like to buy a house.

According to the publication, homeownership contributes to household wealth even though many homes have lost significant value in recent years. NAHB reports that "the nation's homeowners have more than $6 trillion in home equity and they still believe in homeownership."

The equity that accumulated in their homes flows into the economy through education, health expenses, home improvements that increase value of the home, and funding retirement.

Some other findings reported in the publication include polling data based on a survey of 2,000 people likely to vote in 2010. The poll was conducted by for NAHB in May by Public Opinion Strategies of Alexandria, Va., and Lake Research Partners of Washington, D.C.

It showed that the majority of voters (71%) oppose proposals to eliminate the mortgage interest deduction. Findings also revealed that 95% of homeowners were glad they purchased a home; and 73% who didn't own a home were hopeful to one day.

Despite the housing crisis, those in this survey viewed retirement savings programs and homeownership as the best investments. And, 80% of those surveyed said they would advise a family member or close friend to buy real estate.

But for a healthy economy to exist, NAHB points out that "rental housing is essential to a well-housed population." The NAHB writes that there are many benefits from the rental housing market, according to the Joint Center for Housing Studies of Harvard University in "America's Rental Housing: Meeting Challenges, Building On Opportunities".

First, moving to rental housing often is less expensive than homeownership. Second, the primary upkeep of the property is the responsibility of the landlord. Third, while landlords often collect first and last months rent, it is still less than a downpayment. However, the majority of people will rent and own at some point in their lives.

Whether you're looking to rent or buy now, most find that their attraction to homeownership creates a sense of belonging and is a an integral part of their lifestyle.

"Americans still see homeownership as a core value and a key building block of being in the middle class and creating strong jobs in their communities. Owning a home isn't just a policy to people. It isn't just a commodity. It is a core value," Celinda Lake, President Lake Research Partners, writes NAHB in its report.


Written by Phoebe Chongchua
December 9, 2011

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Family Mortgages Help Buyers Pursue The American Dream

The real estate market took a beating and many people suffered severely but many buyers today still want to have the American Dream and own their own home.

The problem is mortgages are hard to get and people are underemployed, but there is a solution that's making housing a family affair.

USA Today reported that family mortgages are growing in popularity. The chief executive, Timothy Burke of National Family Mortgage, calls the family mortgage "an opportunity to create a win-win".

Burke's company sets up and services intrafamily loans. The idea is that in a time when parents of grown children are looking to earn greater interest on their investment money and simultaneously their grown children are looking to buy a house at a lower interest rate, an intrafamily loan could help both sides.

According to USA Today, more than 12 million in loans has been financed to help families through National Family Mortgage. Those intrafamily loans range from an $18,500 down payment to a refinancing for $1.17 million.

For many parents the stock market is a big risk. So the opportunity to invest in their child's mortgage is a creative solution for both parent and child. In some cases, loans are so difficult to get that even if buyers have 20% down, they can still be rejected. Additionally, some buyers are losing out to cash buyers.

The intrafamily loans are giving some buyers a competitive advantage by allowing them to make an all-cash offer, especially on homes like foreclosures where the market is competitive.

According to the National Association of Realtors (NAR), last year, 9% of first-time homebuyers who made a down payment had received a loan from either a friend or relative. Also in 2010, nearly 30%, of those surveyed for NAR's annual Profile of Home Buyers and Sellers, reported that they received a gift from a friend or relative.

If you're planning to use the intrafamily mortgage, be sure to meet with experts to help guide you through the process. As more parents help their grown kids get into housing, the American dream stays alive for them. NAR found, in the same study, that without the help, buying a home would be very difficult–nearly 36% of first-time homebuyers needed help with a downpayment.

Fueling the interest of parents' involvement in an intrafamily loan are a few powerful factors including: the desire to help family members, the incentive to receive a higher interest return, the increasingly affordable homes, and the concern for their children's economic future.

The intrafamily mortgage may be the next best solution to what has not usually been seen in America but is certainly more popular in other cultures, multi-generational housing. However, if families can't combine and live together the intrafamily loan still offers the grown child and the parents an opportunity to help each other in tough economic times.

Related Articles:

Making Home Affordable Program

Out-Of-Work Borrowers Getting Loans

Information to Review Before You Get a Mortgage Loan

Federal Reserve's '5 Tips for Shopping for a Mortgage'

Written by Phoebe Chongchua
November 18, 2011

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Home Inspections

Buying a home is a big decision that includes more than falling in love with the style and decor of a home. A home needs to be in good working order. This is where an home inspector comes in.

A home inspector does a physical inspection of the structure and systems of your prospective home. This means while may love how beautiful the living room’s wood floors are, your inspector can tell if the floor itself will stand for another 20 years. Are there joists that are rotten and need replaced? Is there moisture damage that needs addressed?

What are the basic systems that an inspection covers? You should expect to get a report on the foundation, walls, ceilings, floors, windows, doors, heating and air systems, plumbing (interior), electrical systems and the roof. It’s important that you are present during the inspection so you can be sure that all the systems are checked and that you understand what the problems are and where they’re found.

The inspection itself will set you back several hundred dollars. The amount ranges by region and by inspector. Feel free to ask your real estate agent for suggestions on who to hire. They may have a referral list for you. You can also ask friends and family if they have used someone in the past who they would recommend. If you don’t have anyone to ask, then be sure to check out the American Society of Home Inspectors (ASHI) website, which can help you find inspectors by zip code.

If you are wanting to check for mold or other speciality issues, you’ll most likely need to hire a trained mold specialist to come and inspect the home. This would be a good idea on homes that have mold red flags, such as growth on the walls or floor.

They may be a simple fix, such as repairing a leak and replacing drywall. It could also be a more serious issue, such as black mold, which can wreak havoc on the health of anyone living in the home.

Why is a home inspection really necessary? Your home is a big investment. Most people are on a tight budget and have little room for unexpected expenses. You may have allotted your extra funds towards remodeling the outdated kitchen only to find out that you have $10,000 worth of plumbing issues to fix instead.

Knowing about an issue before closing gives you the upper-hand at the negotiating table. The home in good working order may have been worth $100,000, but with $10,000 of plumbing repairs needed, the price should now be $90,0000.

Just remember that even in new homes, there will be items your home inspector finds need attention. There is no perfect home. Take a moment to reflect on the inspection’s findings and decide if the work that needs done is something you’re willing to take on. You can also ask for the seller to repair these issues before you take possession of the home.

Buying a home can be a wonderful experience. Put a home inspection professional on your side and you’re reducing your risk of costly surprises in the future.


Written by Carla Hill
December 7, 2011

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30-Year Fixed-Rate Mortgage Settles in at 4.00 Percent

In Freddie Mac's results of its Primary Mortgage Market Survey®, the average fixed mortgage rates changing little and remaining near their historic lows helping to keep home buyer affordability high. The 30-year fixed mortgage has averaged at or below 4.00 percent for the fifth consecutive week while the 15-year fixed has hovered around 3.30 percent. Additionally, adjustable-rate mortgages ticked down slightly averaging new record lows for the second straight week.

30-year fixed-rate mortgage (FRM) averaged 4.00 percent with an average 0.7 point for the week ending December 1, 2011, up from last week when it averaged 3.98 percent. Last year at this time, the 30-year FRM averaged 4.46 percent.

15-year FRM this week averaged 3.30 percent with an average 0.8 point, the same from last week when it averaged 3.30 percent. A year ago at this time, the 15-year FRM averaged 3.81 percent.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.90 percent this week, with an average 0.6 point, down from last week when it averaged 2.91 percent. A year ago, the 5-year ARM averaged 3.49 percent.

1-year Treasury-indexed ARM averaged 2.78 percent this week with an average 0.6 point, down from last week when it averaged 2.79 percent. At this time last year, the 1-year ARM averaged 3.25 percent.

Occording to Frank Nothaft, vice president and chief economist, Freddie Mac:

"Mortgage rates were little changed this past week, with the average 30-year fixed-rate mortgage at or below 4.00 percent for the fifth consecutive week. This week the Federal Reserve released its latest Beige Book review of regional economic conditions, noting that the residential real estate market generally remained sluggish through the first half of the fourth quarter but that the economy expanded at a moderate pace in 11 of its 12 Districts. The extraordinarily low mortgage rates of the past month may provide a needed spur to housing activity.

"Economic data released this past week included the Conference Board's consumer confidence index, which had the largest jump in November since April 2003, and the S&P/Case-Shiller© 20-city composite index (seasonally adjusted), which fell for the fifth consecutive month in September to the lowest reading since April 2003. More optimistic consumers, lower house prices, and bargain mortgage rates may have contributed to the 10.4 percent jump in pending home sales in October to the strongest pace since November 2010 and may bode well for future home sales."


Posted by Realty Times

December 2, 2011

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Mortgage Rates Remain Low As Investors Stress Over Europe

Last week, the stock market continued to tumble, but mortgage rates remained low as investors continued to stress over what is happening in Europe. Reports that Black Friday retail sales were better than expected turned things around this week, at least for a little while. Stocks rallied on Monday and were able to gain back some of their losses. Freerateupdate.com's survey of wholesale and direct lenders show that mortgage rates remained flat at all time lows throughout this time. Borrowers who may be interested in a home purchase or refinance will find 30 year fixed mortgage rates are at 3.750%, 15 year fixed mortgage rates are at 3.125% and 5/1 adjustable mortgage rates are at 2.500%. With good credit, these are the lowest mortgage rates available with 0.7 to 1% origination fee. There is a lot of opportunity available right now for qualified borrowers to obtain the best value for their money. According to the Mortgage Banker's Association, purchase applications were up for the week ending November 18th which means that many borrowers are taking advantage of low home prices and low mortgage rates that are now in place at the same time, something that is not seen too often.

FHA mortgage business should begin to pick up now that FHA loan limits have increased to $729,750 in high cost areas. This amount may seem like a lot of mortgage money for FHA to offer, especially because they promote affordable housing, but in metropolitan and surrounding city areas, this is a reasonable cost for an average home. Current FHA 30 year fixed mortgage rates are at 3.500%, FHA 15 year fixed mortgage rates are at 3.000% and FHA 5/1 adjustable mortgage rates are at 3.000%. FHA mortgages require a low down payment of 3.5% to borrowers who have credit scores no lower than 580. For scores between 500 and 580, a 10% down payment is required. There are different options available with FHA mortgages that help cover the higher FHA closing costs (APR) which is due to various FHA fees and the upfront mortgage insurance premium.

Along with other mortgage rates, jumbo mortgage rates have continued to be consistently low which has helped keep mortgage costs down for high end borrowers. Current jumbo 30 year fixed mortgage rates are at 4.500%, jumbo 15 year fixed mortgage rates are at 4.375% and jumbo 5/1 adjustable mortgage rates are at 3.250%. With excellent credit, these are the lowest jumbo mortgage rates available with 0.7 to 1% origination fee. Jumbo mortgages are usually kept in a lender's portfolio since they are not government insured. Considered private loans, jumbo mortgages have stricter guidelines and require a higher down payment and documented assets for necessary reserves.

Market volatility has caused mortgage backed securities (MBS) prices, which moved mortgage rates in the opposite direction, to fluctuate throughout the week. In the end, mortgage rates were able to remain stable. Last week, the Super Committee's failure to come to an agreement on the deficit caused some stirring in the markets. Data releases were mixed with jobless claims coming in higher than expected, personal incomes rising slightly and Durable Goods for October decreasing. Successful reports of Black Friday sales had investors turning away from safer assets at the start of this week, at least for awhile. The European financial crisis is still a major issue since so many countries are involved and the future of the Euro is at stake. Italian bond yields skyrocketed last week which then caused Germany to have problems selling its bonds. Speculation that the IMF will be getting involved is helping to calm investors fears slightly, but concern will continue to be a big part of volatility this week.

FreeRateUpdate.com surveys more than two dozen wholesale and direct lenders’ rate sheets to determine the most accurate mortgage rates available to well qualified consumers at a standard .07 to 1% point origination fee.


Written by Ed Ferrara
December 1, 2011

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Buyers: Making the Right Choice

There are so many different homes to choose from during the buying process. How can you be sure to make the right choice?

From condos, downtown neighborhoods, suburbs, and country homes, there's a perfect fit for every buyer.

To make the best decision you need to be sure to really give time to your decision making process. Yes, your gut can take you in the right direction, but don't be one of the many buyers that falls prey to listening only to their hearts, ending up biting off more than they can chew.

Some homes take more work than others. This goes double for older homes. The same can be said for many foreclosed houses. The price tag might be appealing or you might love the styling of the home, but keep in mind that much of a home's value is actually in its condition.

This is why it is imperative to have an inspection done on any home you are considering buying. Additionally, you should have a clause in your contract that states if the inspection comes back unsatisfactorily that you, the buyer, have the right to end the contract to buy.

Different homes also comes with different lifestyle factors. Some buyers love the idea of having everything within walking distance. They like spending their extra time meeting friends for dinner and drinks or perusing the latest art exhibit. Could a condo be a good fit? It's a definite possibility.

Homeownership comes with its share of time intensive responsibilities. Lawns need upkeeping. Repairs need made. A condo can give you the location you desire without all the extra maintenance you'd find with a single-family home. That means extra time for the things that really matter to you!

Condos, while low maintenance, however, can also have their downsides. You will share walls, common areas, and amenities with neighbors. If you are an extremely private person, then condo living may not be for you.

Do you prefer a more isolated setting? Many people love the idea of country life. Just keep in mind that the further you are from people, the further you are from grocery stores, hospitals, and restaurants.

A suburban lifestyle has gained popularity over the last 20 years. Cities expanded to welcome their growing populations that wanted, and could afford, newer homes with their own nearby shopping centers. School systems can be very good and most areas boast lovely street designs thanks to urban planning.

The real key is to decide what lifestyle is best for you and your family. Once you've decided this, you'll be able to zero on the best location. Next, be sure to consider more than just the price tag of a home. Consider upkeep costs, area taxes, needed repairs, and even future salability. Do your due diligence and you're sure to make the right choice!


Written by Carla Hill
November 30, 2011

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Real Estate Outlook: Will 2012 See Improvement?

We’ve seen the effects of tight mortgage conditions over the last year. Existing and new homes sales have struggled and we are now left with sizable pent-up demand. Will this trend continue into 2012?

For starters, consumer prices fell in October, meaning low wage workers and others struggling to make ends meet will find more affordability. Additionally, according to experts, this decline gives the Federal Reserve more wiggle room when it comes to policy making should the economy worsen.

Why the decline, which was not wholly expected? The recent developments in the European debt crisis have had their affects on American markets.

Yet, affordabilty is the name of the game for 2012. The National Association of Realtors reports that next year will be one of the best years on record for housing affordability.

"Housing affordability conditions, based on the relationship between median home prices, mortgage interest rates, and median family income, have been at a record high this year," said Lawrence Yun. "Very favorable affordability conditions will dominate next year as well, which will probably be the second best year on record dating back to 1970. Our hope is that credit restrictions will ease and allow more home buyers to take advantage of current opportunities."

NAR President Phipps says that "mortgage availability remains a real concern since the private market has yet to return. While the housing market is still in recovery, we firmly believe that lower loan limits will only further restrict liquidity in mortgage markets."

Home sales could start to see some improvement in the new year, though. Existing-home sales are expected to rise 4 to 5 percent.

"Once home prices turn positive on a sustained basis, consumer confidence will rise and help the broader economy to improve," Yun added. "If we could maintain sound and reasonable mortgage underwriting standards, the market would be able to avoid a future big boom and bust cycle, but mortgage standards remain overly stringent."

While mortgage rates may rise slightly, they will still be near historic lows. In fact, the Federal Reserve is committed to keeping rates low through mid-2013.

The latest reports on the remodeling market show that today’s low rates may be allowing stay put homeowners the opportunity to refinance and funnel extra funds into home improvements. According to BuildFax the remodeling market is up 34 percent over September 2010. They report the top projects are roof remodels/replacements followed by deck and bathroom remodels.

Nearly two and a half years after the recession the economy and housing market continue to struggle, but recent stats and surveys are revealing that a change could be on the horizon for 2012. For now, affordability and interest rates are making for tempting deals for today’s buyers.


Written by Carla Hill
November 21, 2011

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Family Mortgages Help Buyers Pursue The American Dream

The real estate market took a beating and many people suffered severely but many buyers today still want to have the American Dream and own their own home.

The problem is mortgages are hard to get and people are underemployed, but there is a solution that's making housing a family affair.

USA Today reported that family mortgages are growing in popularity. The chief executive, Timothy Burke of National Family Mortgage, calls the family mortgage "an opportunity to create a win-win".

Burke's company sets up and services intrafamily loans. The idea is that in a time when parents of grown children are looking to earn greater interest on their investment money and simultaneously their grown children are looking to buy a house at a lower interest rate, an intrafamily loan could help both sides.

According to USA Today, more than 12 million in loans has been financed to help families through National Family Mortgage. Those intrafamily loans range from an $18,500 down payment to a refinancing for $1.17 million.

For many parents the stock market is a big risk. So the opportunity to invest in their child's mortgage is a creative solution for both parent and child. In some cases, loans are so difficult to get that even if buyers have 20% down, they can still be rejected. Additionally, some buyers are losing out to cash buyers.

The intrafamily loans are giving some buyers a competitive advantage by allowing them to make an all-cash offer, especially on homes like foreclosures where the market is competitive.

According to the National Association of Realtors (NAR), last year, 9% of first-time homebuyers who made a down payment had received a loan from either a friend or relative. Also in 2010, nearly 30%, of those surveyed for NAR's annual Profile of Home Buyers and Sellers, reported that they received a gift from a friend or relative.

If you're planning to use the intrafamily mortgage, be sure to meet with experts to help guide you through the process. As more parents help their grown kids get into housing, the American dream stays alive for them. NAR found, in the same study, that without the help, buying a home would be very difficult–nearly 36% of first-time homebuyers needed help with a downpayment.

Fueling the interest of parents' involvement in an intrafamily loan are a few powerful factors including: the desire to help family members, the incentive to receive a higher interest return, the increasingly affordable homes, and the concern for their children's economic future.

The intrafamily mortgage may be the next best solution to what has not usually been seen in America but is certainly more popular in other cultures, multi-generational housing. However, if families can't combine and live together the intrafamily loan still offers the grown child and the parents an opportunity to help each other in tough economic times.

Published by Realty Times

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Will Rates Stay Low?

While the Federal Reserve has promised to keep rates "low" until 2013, it is clear to many experts that the current historical lows we are experiencing will not last.

According to the latest projections from the National Association of Realtors® (NAR), interest rates should gradually rise out of historic lows as we move through 2012.

This isn't the most welcome news for a housing market that has continued to falter and a credit market that already has tightened lending standards

The NAR reports that current surveys reflect the tight credit conditions. They report that recent buyers are staying well within their means, with higher incomes and higher downpayments.

Richard Peach, Senior Vice President at the Federal Reserve Board of New York, who said the economy is under-performing, reports, "Nearly two-and-a-half years since the end of 'the great recession,' the economy continues to operate well below its potential. Among the significant structural impediments are the legacy of the housing boom and bust, and fiscal contrition at the state and local level."

Lawrence Yun, chief economist of the National Association of Realtors®, said home sales should be stronger. "Tight mortgage credit conditions have been holding back home buyers all year, and consumer confidence has been shaky recently," he said. "Nonetheless, there is a sizable pent-up demand based on population growth, employment levels and a doubling-up phenomenon that can't continue indefinitely. This demand could quickly stimulate the market when conditions improve."

It is this improving jobs markets that many analysts are waiting for. Yun projects the GDP will grow 1.8 percent this year and 2.2 percent in 2012. The unemployment rate should decline, albeit modestly, to around 8.7 percent by the end of 2012.

Around this same time, experts expect that "mortgage interest rates should gradually rise from recent record lows and reach 4.5 percent by the middle of 2012."

This is still an incredibly low rate and many experts feel that housing market, while still struggling, will improve throughout next year and after. In fact, the NAR expects new home sales to reach 372,000 next year. Existing home sales could fare just as well, rising 4 to 5 percent in 2012.

"Housing affordability conditions, based on the relationship between median home prices, mortgage interest rates, and median family income, have been at a record high this year," Yun said. "Very favorable affordability conditions will dominate next year as well, which will probably be the second best year on record dating back to 1970. Our hope is that credit restrictions will ease and allow more home buyers to take advantage of current opportunities." The bottom line is that the housing market should improve over the next year and along with that improvement will come higher interest rates. Buyers interested in making a move should take head of today's historically low rates and high levels of affordability.

Published by Realty Times
Written by Carla Hill
November 16, 2011

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30-Year Fixed-Rate Mortgage Averages 3.99 Percent

MCLEAN, Va., -- Freddie Mac today released the results of its Primary Mortgage Market Survey® (PMMS®), showing average mortgage rates changing little from the previous week amid a mix of economic data reports as the 30-year fixed-rate mortgage averaged 3.99 percent, dropping below 4.00 percent for the second time this year. The 30-year fixed averaged 3.94 percent in the October 6, 2011 survey.

30-year fixed-rate mortgage (FRM) averaged 3.99 percent with an average 0.7 point for the week ending November 10, 2011, down from last week when it averaged 4.00 percent. Last year at this time, the 30-year FRM averaged 4.17 percent.

15-year FRM this week averaged 3.30 percent with an average 0.8 point, down from last week when it averaged 3.31 percent. A year ago at this time, the 15-year FRM averaged 3.57 percent.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.98 percent this week, with an average 0.6 point, up from last week when it averaged 2.96 percent. A year ago, the 5-year ARM averaged 3.25 percent.

1-year Treasury-indexed ARM averaged 2.95 percent this week with an average 0.6 point, up from last week when it averaged 2.88 percent. At this time last year, the 1-year ARM averaged 3.26 percent.

Frank Nothaft, vice president and chief economist at Freddie Mac, reports, "Fixed mortgage rates were little changed this week amid a mix of economic data reports. The economy added 80,000 net jobs in October, below the market consensus forecast, but employment gains over the prior two months were revised up by 102,000 and the unemployment rate fell to 9.0 percent, the lowest in six months. Factory orders improved in September, yet the expansion in the service industry slowed in October."

"Soft house prices and low mortgage rates have kept home-buyer affordability historically high, according to the National Association of Realtors® (NAR). In the third quarter, 74 percent of the NAR's metropolitan areas exhibited annual house price declines, compared to 72 percent in the second quarter. In addition, 30-year fixed mortgage rates averaged 4.3 percent in the third quarter as opposed to 4.7 percent in the second. These factors helped raise September's NAR Housing Affordability Index to the third highest reading on record which dates back to 1971."

Published by Realty Times
November 11, 2011

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10 Tips For Those Who Have Decided To Buy

Wanting to buy a home and deciding to buy a home are two different things. The first is a desire or a dream. The second is commitment to achieve the goal. Do you want to buy, or have you decided to buy?

What are you planning when you think of purchasing real estate, whether it's a house, condominium, cottage, or investment property? Is this something you'd like to do, but could be dissuaded from if it seems too hard, or your life becomes busy? Or, is this a goal you take on with determination to overcome barriers and maximize strengths?

If you are ready to commit to success, you are determined to replace wanting to buy with deciding to buy. Here are 10 tips to help you on the path to real estate ownership.

1. Decide who will facilitate your buy The professional team you put together can make all the difference. You're not looking for new friends, so concentrate on credentials and experience. Salespeople are trained to be personable, so if someone is likeable that's nothing special. Their knowledge and ability to strategize on your behalf does matter. The real estate professional you select must be as convinced as you are that you can be successful and understand how to make success happen.

2. Decide when will you buy Buying a home, cottage, or investment property is not something to rush into, but taking a long time does not necessarily make your choice a better one. A recent online survey by Canada Mortgage and Housing Corporation, the national housing agency, revealed that Canadians take, on average, 11 months to plan their purchase. That means sometimes the process takes longer than a year, and sometimes things happen more quickly. To facilitate a sound buying decision, project ahead three months at a time to see what external factors in your life and career might disrupt buying momentum, or add additional advantages to the timing. Possibilities of interest rate increases and price fluctuations are difficult to pinpoint for even the most informed experts, so prepare to respond to any shifts commonly predicted for your chosen location. Keep in mind, that if your Offer to Purchase were accepted today, you would probably not move in for 30 to 90 days depending on the sellers' plans and yours. Tip: The more pressure you put on yourself to adhere to a specific move-in date, the less flexibility you'll have in purchase negotiations regarding price and terms.

3. Decide where you will buy Location is still the key factor in sustainable value and rate of appreciation over time. The best returns come from buying the best location you can afford—neighbourhood and street, or condominium complex and floor. You can renovate or rebuilt the structure or unit, but you cannot move the land or condominium complex. Location matters. Spend time discussing your choice of housing, neighbourhoods, and special features like in-law suites or separate apartments with your professional advisors before you start looking at properties.

4. Decide which you will buy It's not how many properties you view that will ensure success, but whether you see the property that best suits your needs, wants, and decision making. One strategy involves acting quickly with newly-listed properties, another stresses the hidden value in slow-to-sell real estate. You may decide to stay on alert for new listings in the best neighbourhood and on the best street you can afford. Time invested in preparation will enable you to act quickly when the ideal property hits the market. If you decide on the alternate strategy that seeks purchase-price advantages with properties that do not show well, still search out the best location you can afford. Here, you'll view tired or poorly-decorated condominium units or houses, and revisit with contractors and decorator to evaluate true potential.

5. Decide what you will buy Stay on point and avoid getting carried away. Your buyer agent will help keep you focussed, but you need to be sure you know what features you want and need, and why. Does proximity to schools or public transportation matter? What will your home-based business require? Will an income-suite enable you to buy an even better location? Is this a fixer-up property that will build your financial strength, so you can eventually buy your goal property, or are you here for the long haul? Write your must-have list down and check it when you view properties and before you make an offer.

6. Decide what value you can add Do you have skill with interior design or home renovation? Or, will you hire the expertise you need? Concentrate on improvements that increase functionality, affordability, comfort, and resale, not just changes in decor. What professional skills can you add to the search, analysis, or decision making?

7. Decide what buying will cost Set a budget for the entire project, not just the mortgage. Your real estate professional can help prepare a full financial projection of costs. For more on mortgages, see “Mortgages: 7 Things You Don't Want to Learn the Hard Way.”

8. Decide how you measure success Short of having your Offer to Purchase accepted, how will you know how well you're progressing? What ongoing evaluation criteria does your real estate professional suggest? If you don't track time and the properties you've seen, you may become overwhelmed with detail and confused by the continually changing real estate market. While you're set on your decision to buy, interest rates, the economy, and many other variables may change. Focus is the key. Organization will ensure your success.

9. Decide what's unique to your situation What considerations or challenges must you take into account that may not be true for all buyers? Do you have a property to sell before you can buy? Do you have special mobility needs, or design features like higher ceilings or a detached garage that are important to your hobbies or business? Share this information with your real estate professional at the start, so they have the full picture of your needs.

10. Decide: What's the point of buying? This decision must come first and stay first as you go. There are many great reasons for buying real estate, but what are yours? Not reasons you've been told to buy or think you should, but why you know you're prepared to invest time and effort on the quest. When your point or purpose in buying is crystal clear, you can weigh the relative merits of the properties you view, and the many small decisions that must be made on the way to the first big step: Have you decided to make an offer?

Written By: PJ Wade
August 9, 2011

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Tips For Saving!

Saving money for a downpayment is a very worthy goal. Homeownership has been shown to be a good long-term investment that creates family and community stability.

The National Association of Realtors' 2010 Social Benefits of Homeownership and Stable Housing study found some delightful upsides of becoming a homeowner, such as it making "a significant positive impact on educational achievement," and "evidence of the positive impact of homeownership on health even after controlling for factors like income and education.'

Many families find finances to be tight. Money comes and goes. How can you budget your life so that homeownership turns from a dream into reality?

First, be realistic about your current expenses. Take a few weeks to a month to track every expenditure. If you use a debit card for every purchase, you may already be able to go into last month's records for a break-down. Divide expenses into columns: rent/mortgage, groceries, household expenses, travel, fuel, dining out, entertainment, clothing, etc.

Now, align that list with your monthly income. Are you sending out more than you're taking in? Today's economy is not a time to be cutting it close. If homeownership is truly a goal, then you should make sure that you are saving all you can.

Decide what things can be done without. Are you overspending on dining out or going to movies? Try to find alternatives that cost less or content yourself with home-cooked goodness and Netflix! A typical night out can cost anywhere from $50 to $100. If you save that money each week it adds up to $2,600 to $5,200 a year!

The same goes for cable or satellite TV. Many people pay tons each month for their beloved channels. At $100 a month, that adds up to $1,200 a year.

Start a savings account that is specifically for your downpayment. Put money in it at the beginning of each pay period. We tend to spend a dollar here or a dollar there when we have it accessible in our daily accounts. Be tough on yourself and transfer the funds to savings as soon as you have them. Then watch them grow!

Find other ways to save on money. Some families shop sales and with coupons. It's time downgrade other parts of your life. Do you really need a luxury car and latest fashions or will a cheaper model and recycled fashions be sufficient?

Many companies offer family plans, such as gyms and cell phone providers. Credit card companies may be willing to negotiate a lower rate on your balances. Be willing to talk to companies to see what deals they offer!

The act of savings can be hard in our society. Everything we "want" is right at our fingertips, either down the block or on the Internet. The key to reaching your goal is to keep your focus. It will be worth it!

Written By: Carla Hill
October 5, 2011

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Tying the Knot? Good Way Couples Can Save for a Down Payment on a Home

Saving money for a down payment on a home has always been a challenge and a lesson in financial discipline but today it’s, perhaps, more difficult than ever.

That’s partly because the down payment is more substantial than in the past few years when zero down could get you into your dream home.

The Washington Post recently reported on a unique, sign-of-the-times approach to saving for a down payment.

These days engaged couples are scrapping the traditional wedding list and opting for a non-traditional wedding registry that creates an opportunity for wedding guests to help collect cash for a down payment.

The National Association of Realtors reported for 2010 that 27 percent of first-time homebuyers used gift money from relatives and friends to make their down payment. Nearly 60 percent of homebuyers were married couples.

Deposit a Gift, a New York City company, has set up about 6,500 gift registries with 30 percent of them, split evenly, for down-payment funds and home-improvement funds, since it launched in 2009.

It seems no more “white elephant” gifts; people are asking for and getting what they really need–cash for their home.

The down-payment gift registry helps take the awkwardness out of guests simply giving money. Today, couples are uploading photos on blog sites and showing their dream home much like the old days when couples would ask for dinner china or fine stemware.

The down-payment fund touches many people in a very personal way. Some people have already lost their home to foreclosure; still others know the enormous struggle to make ends meet. Getting some financial help to purchase a home is largely a universal need.

A quick search on the Internet can put you in touch with a number of wedding gift registries. You should research them carefully. Many include other helpful options such as connecting you with a directory or wedding vendors and even a rebate for using their select vendors.

Once the money starts rolling in, however, you have to understand how you can use it. The rules for using gift money depend on the type of loan you are getting. So be sure to ask a qualified expert for assistance.

Generally, a down payment will require that at least 5 percent of the money comes from your own savings, not gift money from the registry. There might be some exceptions, so check with the mortgage company.

Some mortgage companies, like SunTrust Mortgage, even have a bridal registry that works just like a down payment registry. In 1996, the Federal Housing Administration encouraged lenders to establish bridal registry accounts to accept money for savings toward a down payment from the couple’s relatives and friends. However, this never really caught on with lenders.

SunTrust Mortgage offers other programs for first-time buyers to help them save for a down payment. The Home Purchase Registry Account allows contributions from relatives and friends who do not have a financial interest in the transaction. Various other rules apply; be sure to go over the details with your agent and lender.

Written by Phoebe Chongchua
October 28, 2011

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Five Great Things about Homeownership

If you've been on the fence about homeownership, now is the time to take a leap! Don't let the negative press deter you from one of life's greatest joys.

Take a look at five short and sweet reasons that homeownership is great!

1. Equity. When you pay rent, you never see that money again. It is lining the landlord's pocket. Yes, buying a home may come with some hefty initial costs (downpayment, closing costs, inspections), but you will make that money back over time in equity built in the home. Historically, homes appreciate by about 4 to 6 percent a year. Some areas are still experiencing normal appreciation rates. For the areas that have seen harder times since the recession, experts feel that the housing market will recover. Homeownership is about building long-term wealth. A home bought for $10,000 in 1960 is most likely worth 10 times that in today's market.

2. Relationships: Renters tend to see their neighbors come and go quickly. Some people sign year leases while others are in the community for much shorter terms. Apartment complexes also tend to have less common shared space for people to meet, greet, and socialize. Homeowners, however, have yards, walking trails, or community pools and clubhouses where they can get to know each other. Neighbors stay put much longer (at least three to five years if they hope to recoup their closing costs). This means more time to develop relationships. Research has shown that people with healthy relationships have more happiness and less stress.

3. Predictability: Well, as long as you have a fixed-rate term on your mortgage it's predictable. Most people buying homes today know that a fixed-rate is the way to go. This means your payment amount is fixed for the life of the term. If your mortgage payment is $500 today, then it will still be $500 a month in 10 years. This allows for people to budget and make solid financial plans. The sub-prime crisis meant many homeowners with adjustable rate mortgages saw their monthly payments rise and then rise some more. Homeownership, though, generally comes with a predictable table of expenditures. Even the big purchases are predictable. You know most roofs last just 15 years (or so). You know that each year you'll need to pay for the gutters to be cleaned, and so on.

4. Ownership: Okay, this is a given. Homeownership means you "own" your home. That comes with some incredible perks, though! You can renovate, update, paint, and decorate to your heart's desire. You can plant trees, install a pool, expand the patio, or do holiday decorating that would rival the Kranks (if the HOA allows!). The bottom line is this is your home and you can personalize it to your taste. Most renters are stuck with the same beige walls and beige carpet that has been standard apartment decor for 20 years. Now is your chance to let your home speak!

5. Great Deals: It's a great time to buy. Interest rates are at historic lows. We're talking 4.0 percent instead of 6.0 or higher. This means big savings for today's buyers. Home prices have also taken a dip since the recession, which means homes are more affordable than ever. If you have steady income and cash for a downpayment, then be sure to talk to your local real estate agent about what homes in your area could be a fit for you.

Homeownership can be a real joy. It's time to get off the fence and into a home that is right for you!

Written by Carla Hill
November 2, 2011

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Persevere, Don't Abandon Your Dreams

Are you letting global uncertainty extinguish your real estate dreams without full consideration because money is an issue? Sometimes balancing livable compromises against researched options can help you achieve more than you may have believed possible.

Your future should not be entirely defined by what is affordable. When it comes to where you’ll live and how, concentrating on finances alone may short-change you in the long run.

One long-time reader is living proof that adapting your finances to achieve your dreams is a powerful alternative to designing your life around a lack of money.

When two people close to Tina Lowe (identity protected) died prematurely, Lowe promised herself she would not to spend her life sitting at a desk. She wanted to retire at 60 and start enjoying life.

“Friends and family couldn’t understand how I was doing it, but I did it anyway because that is what I wanted to do,” said Lowe, explaining how she achieved home ownership and early retirement without the million dollars that pundits say is essential to a successful future.

Lowe was almost 50 when her 30-year marriage ended, leaving her financially vulnerable. For a few years, Lowe held down two jobs to make ends meet. Eventually, a move to a small, less expensive apartment on the outskirts of town allowed her to quit the part-time weekend job.

Lowe invested time and effort in learning about money. She took advantage of her employer’s shared-contribution program and a loan from a friend to build up her Registered Retirement Savings Plan (RRSP). She also invested time in learning all she could about pensions, indexing, RRSPs, and, later, Tax-Free Savings Accounts (TFSA). From company seminars to reading anything she could find on the principles of investing, Lowe made sure she fully understood how money made money. By the time Lowe left work at 60, her RRSP fund totaled almost C$50,000.

Economic volatility did not shake Lowe’s determination to leave work on schedule. Meticulous planning and appreciation of the rewards of a simple lifestyle maintained her commitment. Creative back-up plans added security.

When Lowe noticed an advertisement for a condominium that could be carried for about what she was paying in rent, she revived the dream of home ownership that had been abandoned in favour of early retirement. Once again Lowes began researching diligently. She learned how condominiums work and what gave them sustainable value. When she discovered that prices increase with the number of amenities, square footage, and the higher in the building you are, she decided to buy at a smaller unit on a lower floor and in a less “lux” building. Lowe bought the location and neighbourhood she loved and saved thousands of dollars. Lowe discovered a south-facing, self-contained fifth-floor, 344-square-foot unit with a balcony. Since the small building was free of fancy amenities, monthly maintenance fees remain affordable. The unit increased in value over her pre-construction purchase even before she moved in.

“It will be tight because it has been since day one, but I’m doing it,” said Lowe emphasizing that not smoking or owning a car stretches her income further. “It is important not to let anyone put you down or discourage you. When I first found this place, I had been to [a] real estate seminar and they got me going. Then I had one family member really put me down. Finally, a friend who is an accountant thought it was a good idea and encouraged me, and I thought, ‘I can do this.’ You must use knowledge to survive. It is very tight—I am not going to kid anyone, but I am still very happy I retired at 60.”

Knowledge is power. Take the time to understand which costs may become a challenge in the future. You may decide a part-time job will supplement investment or pension income. Consider housing like co-operatives where contributing skills and “sweat equity” may make the important affordable difference. Perhaps teaming up with friends or relatives will increase your buying power.

Continuing with income-generating projects will be increasingly commonplace, both out of interest and necessity.

• Developers realize that they are creating new communities within the subdivision or high-rise they build. Some perceptive developers create work-live options that will provide services for residents while creating income streams for owners.



• Churches, legions and other non-profit organizations have become community-builders in a “bricks and mortar” sense of the word by developing housing for their congregations, members and neighbours. Often this housing is below market value.

Communities involve varying numbers of people, but their strength lies in individual resilience, self-actualization and freedom. Property ownership is one outward symbol of these marks of individuality since no two properties – even condominiums, row houses etc. – are identical.

Over the past 20 years, the national home ownership rate has risen steadily. Although low interest rates, increasing disposable incomes, and stable employment conditions are credited with that improvement, the future still holds potential for growth. The wish for continued control over one’s home and life keeps increasing numbers of Canadians intent on investigating their all their options.

Waiting for great times to return is not a strategy, it’s a tragedy. Put your money to work for you in even the smallest ways. Think before you spend—“What else could I do with that money?—so you keep more of what you earn and continually move dreams closer to reality.

Remember, the impossible may take a little longer, but you can make it happen with perseverance.

Written By PJ Wade
October 18,2011

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