Rent vs. Buy Decision More Than A Question of Affordability

Years ago, growing up with her parents in a single-family home in a Chicago suburb, Clarissa Mankus was infused with the American Dream

When it was time to leave the nest a few years back, Mankus purchased a condo, but homeownership quickly became her albatross, according to a story by Bill Glauber in the Milwaukee Journal Sentinel.

The Gen-Yer had tuition debt to pay and that meant being mobile, independent and ready to hit the road at any time.

After a few months as a homeowner, she unloaded the condo, moved in to a rental with a friend and regained control of her life, Glauber writes.

For a growing number of those seeking shelter, the affordability component of the rent-vs.-buy comparison takes a back to seat to finding housing that accommodates their lifestyle.

"For decades, Americans have scrimped and saved in order to buy that starter house and begin accruing equity. But do the same benefits of home ownership apply in every situation?" asks Dima Deych Marketing Director at Mayo Group, a Boston, MA-based real estate investment, development and management company.

Apparently not.

Deych says there are a host of considerations beyond affordability shelter seekers should consider before they buy or rent.

Location.Just as location is a factor in buying, where you rent is also key.

Buying a house in or near the downtown district of a large city is often more expensive than a suburban home. Because of the growth of the urban infill movement as well as space constraints that gave rise to high-density living years ago, apartments can be more readily available.

"Urban settings are seeing an influx of people who want to be able to live near work and the cultural attractions that you find in a big city," says John McGrail, CEO of Mayo Group.

Ease of relocation. A short-term or month-to-month rental contract is a lot easier to unload than it is to sell a property. What's more, if you sell a property too soon, given the time it takes to accrue equity these days, you could sell at a big loss.

If you are on a career track, planning to move back to your home town to be with family, or just need the flexibility to relocate, buying may not be for you.

Square footage. If you are on the go, career-wise, or just don't spend much time at home, are outdoorsy and travel frequently, a studio apartment or place to sleep may be all you need. If you don't spend much time in your house, a large space will be a waste of space and money.

Job security concerns. Without job security, you need the flexibility to relocate. A homeowner's worst nightmare is losing a job and not being able to quickly find another or being forced to relocate to find another job. In both cases, paying the mortgage or selling the home could be tough.

Defaulting on your mortgage can lead to foreclosure, wrecked credit and high blood pressure. If your employment is shaky, now's not the time to buy. Jobs are tough to come by.

The economy. The soft economy could impact your employment opportunities. It has also prompted lenders to tighten credit. Take a hard look at the local economy where you would like to buy. Renting in a recovering economy can give you time to save for a down payment and put yourself in the best position to buy.

Poor credit. If your credit is trashed, lenders won't approve a mortgage for you. A year or two renting and careful credit use can give you time to boost your credit score and position yourself as a strong homebuyer.

Maintenance. The best homeowners are do-it-yourselfers who don't have to call the plumber every time the sink stops up. In an apartment complex, even a single-family home you might rent, the landlord or property owner direct, or through the building manager or the superintendent, is typically responsible for maintenance.

Your relationship. If your relationship is young or on shaky ground, think about the consequences of buying a home with someone who may be out of the picture weeks, months or even years from now. If you're dependent on two incomes to make the mortgage payments, if there could be a court fight over assets if you split, renting is probably a better deal.

When you share assets in marriage or other relationships a prenuptial or other agreement also may be a good idea.


Written by Broderick Perkins
June 28, 2012 Published by Realty Times

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30-year Fixed-rate Mortgage Matches All-time Record Low

In Freddie Mac's results of its Primary Mortgage Market Survey® the average fixed mortgage rates starting the year at or near their all-time lows. The 30-year fixed averaged 3.91 percent matching its all-time record low amid recent data showing signs of improvement in the housing market and manufacturing industry. This marks the fifth consecutive week the 30-year fixed has averaged below 4.00 percent.

30-year fixed-rate mortgage (FRM) averaged 3.91 percent with an average 0.8 point for the week ending January 5, 2012, down from last week when it averaged 3.95 percent. Last year at this time, the 30-year FRM averaged 4.77 percent.

15-year FRM this week averaged 3.23 percent with an average 0.8 point, down from last week when it averaged 3.24 percent. A year ago at this time, the 15-year FRM averaged 4.13 percent.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.86 percent this week, with an average 0.7 point, down from last week when it averaged 2.88 percent. A year ago, the 5-year ARM averaged 3.75 percent.

1-year Treasury-indexed ARM averaged 2.80 percent this week with an average 0.6 point, up from last week when it averaged 2.78 percent. At this time last year, the 1-year ARM averaged 3.24 percent.

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

"Fixed mortgage rates started the year a little lower this week just as recent data reports indicate the housing market and manufacturing industry are showing signs of improvement. Pending existing home sales in November jumped 7.3 percent, nearly five times greater than the market consensus forecast, to its strongest pace since April 2010. In addition, construction spending rose 1.2 percent in November, supported by the residential sector which exhibited its fourth consecutive monthly increase. Similarly, manufacturing expanded in December at the fastest pace in six months."


January 6, 2012 Published by Realty Times

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Pending Sales Rise

According to the latest report from the National Association of Realtors Pending Homes Sales Index, pending home sales are at the highest level in 19 months.

What has precipitated this rise? Lawrence Yun, NAR chief economist, said the gains may result partially from delayed transactions. "Housing affordability conditions are at a record high and there is a pent-up demand from buyers who’ve been on the sidelines, but contract failures have been running unusually high. Some of the increase in pending home sales appears to be from buyers recommitting after an initial contract ran into problems, often with the mortgage," he said.

There was a 7.3 percent jump in contract signings in November, up 5.9 percent from the year prior. The last time to market had this many signings was in April 2010 when the deadline for the first time home buyer tax credit was

"November is doing reasonably well in comparison with the past year. The sustained rise in contract activity suggests that closed existing-home sales, which are the important final economic impact figures, should continue to improve in the months ahead," Yun added.

Regionally, the largest rise was seen in the West, which has previously struggled. It rose 14.9 percent for the Month, giving it a boost of 2.9 percent of November 2010.

The Northeast was close to double-digit gains with a solid 8.1 percent rise. It is still 0.3 percent below last year’s figures. The Midwest is doing well. It is 9.5 percent above November 2010 for pending sales and rose 3.3 percent for the month.

Finally, the South rose 4.3 percent, rising 8.7 percent above last year’s numbers.

Other factors that could have contributed to this rise are recent declines in the unemployment rate. The rate has lingered about 9.0 percent for months, but fell below this mark in recent weeks. Holiday hirings were up, but so were hirings in other sectors.

Consumer confidence peaked 10 points in November to the highest rate seen since the end of the recession and retailers boasted the best holiday sales figures in years. This could signal a return of buyers to the housing market.


Written by Carla Hill
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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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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Or visit our website: www.LivingLakeTahoe.com

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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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

Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com

Mortgage Rates Fall, Housing Opportunities Getting Better

For four weeks in a row, mortgage rates are seeing historic lows. The 30-year fixed average interest rate fell from 4.09% to 4.01% in the end of September. This marks the lowest rate since 1951.

Also, economists call the 15-year fixed mortgage drop to 3.28% the lowest ever for that loan. It appears they could go even lower as the Federal Reserve announced that it will push long-term rates down further.

These historically low mortgage rates aren't necessarily rapidly selling homes. Across the country contract signings have been down. According to USAToday.com, “July's index fell 5.8% in the Northeast, 3.7% in the Midwest and 2.4% in the West. It rose 2.6% in the South.”

The index of sales agreements, tracked by the National Association of Realtors, showed a 1.2% drop down to 88.6 (100 is considered healthy).

Still the opportunities for homeownership keep getting better. Some markets are more affordable than ever; prices have been cut in half in some metro areas.

Of course, getting a loan can be part of the barrier to entry in the housing market. These days, to qualify for a loan a 20% downpayment coupled with a high credit score are required by some lenders.

Now, a new credit score service being introduced in November claims it will give lenders a more accurate picture of a borrower's outstanding debts. The company's website has a countdown to the release of CoreScore (credit report from CoreLogic). It touts the system as a way to “see borrowers as you've never seen them before.”

Some lenders are being extremely strict because they have difficulty determining previous credit behavior. But according to CoreLogic, everything will soon change. The CoreScore credit report is a supplement, not a replacement for the current credit reporting systems.

According to the company, “The supplemental information the CoreScore credit report provides will expand your view of borrower credit profiles and deliver important insight into unseen risk and opportunities.”

Among the information that the CoreScore report will deliver to lenders are the following:

1. Properties owned—with and without debt obligations Mortgage obligations with companies that may not report to traditional credit reporting agencies

2. Property legal filings, such as notices of default

3. Property tax amounts and payment status

4. Estimated market values on all U.S. properties owned

5. Rental applications and evictions

6. Inquiries and charge-offs from pay-day and online lenders

7. Consumer-specific bankruptcies, liens, judgments and child support obligations

With mortgage restrictions tighter than ever and more supplemental information being offered to lenders about borrowers' debts and credit behavior, it's vital for borrowers to understand the most important qualifying factors that influence lenders.

The chief concern is the ability to repay the loan followed closely by the willingness to repay.

Borrowers can place themselves in better standing with lenders by doing two key things: paying off as much debt as possible before applying for a mortgage. This is always good as it lowers the debt-to-income ratio. Secondly, lenders examine borrowers' track record of repayment to determine how they will behave if they are issued a loan. Making sure that credit behavior is monitored and any discrepancies are handled before applying for a loan will help borrowers have a cleaner record and increase the chances of qualifying for a mortgage.


Written by Phoebe Chongchua
October 7, 2011

Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com

Choosing a Condo

Not all home buyers have dreams of spacious lawns, rambling rooms, and secluded properties. Many buyers, rather, are on the search for a home that will be easy to care for and will give them plenty of chances to be active and social.

From first-time buyers to down-sizing retirees, condos offer a wealth of opportunity. Many come equipped with clubhouses, gamerooms, gyms, and common outdoor meeting areas. Others go above and beyond with organized mixers, dances, movie nights, and more!

Condos can be a great choice for single homeowners looking to socialize. They can be a wonderful choice for older adults who are fully capable of caring for themselves, but wish to cut back on home maintenance.

Typically, owning a condo means you no longer have to worry about mowing your yard, maintaining landscaping, cleaning or scooping sidewalks, or making large-scale repairs. You pay a small fee each month that pays for your portion of this upkeep. Your condo association should also have a reserve fund that is held for large repairs, such as roof replacement, when the time comes.

The operative word is "should." Not all condo associations are the same. Before you buy, be sure to check into how diligent the association is. Are they up-to-date on reserve studies? How often in the last 10 years have they raised fees? Do they have an lawsuits pending?

Additionally, not all condo communities are equal when it comes to amenities. When you set up a showing, be sure to visit all that will be available.

This next upside has a catch. Condos generally come with an extensive set of rules. This means the condo government says what you can do to your home and what you can't. They can prohibit improvements, pets, home-based businesses, and subletting. The positive side of these rules is that your condo community should stay uniform, updated, and in good order. If you have an issue with a neighbor, you can easily lodge a complaint, for they are liable to the condo rules.

As every up has it downs, there are some drawbacks to owning a condo. One primary negative is the overall lack of storage. Generally, you have no garage, attic, basement, or backyard storage shed to house those Christmas decorations and other treasures.

Another hefty downside is the monthly HOA fees. For the entire time you own the condo, you will be expected to pay fees. While these go towards upkeep and amenities, it is an added financial burden that one must consider on top of purchase prices. Additionally, you are still responsible to pay your monthly fees even if your condo is entirely paid off.

Finally, while owning a condo means you have many comparable homes on hand for pricing comparison, it also means you have lots of competition on hand for units that are just like yours.

Condos can make ideal and happy homes. Be sure to do your due diligence when researching what community is right for you!


Written by Carla Hill
October 12, 2011

Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com

Mixed News Keeps Low Mortgage Rates Stable

For the past week, mixed economic news that continues to lead the headlines has helped to keep low mortgage rates stable. Financial troubles in Europe has left investors busy each day waiting to see if Greece will default or a rescue plan will be implemented. Here in the U.S., even a negative report that is not considered terribly bad is spreading optimism to the markets making any predictions unreliable.

Although seesawing market movements can be stressful for watchers, Freerateupdate.com's daily survey of wholesale and direct lenders show that the back and forth actions of investors is actually keeping mortgage rates at the same level. Current 30 year fixed mortgage rates are at 3.875%, 15 year fixed mortgage rates are at 3.250% and 5/1 adjustable mortgage rates are at 2.625%. If you have been watching mortgage rates and their fluctuations, then you are aware that mortgage rates have reached historic lows.

Not knowing what direction they will head is probably the best incentive for borrowers to get their mortgage application in motion. With good credit, borrowers can obtain these low mortgage rates with 0.7 to 1% origination fee. Of course, income will need to be verified and other documentation will need to be checked to receive lender approval. Whether you are buying a home or refinancing an existing mortgage, there has never been a better opportunity to receive the lowest mortgage rates available.

FHA has been keeping busy especially with first time home buyers. First time home buyers turn to FHA because no other mortgage loans offer a down payment of 3.5%. Even with credit as low as 500, FHA will accept a down payment of 10%. Then there are the low FHA mortgage rates that are offered and are not based on credit scores. Current FHA 30 year fixed mortgage rates are at 3.750%, 15 year fixed mortgage rates are at 3.500% and FHA 5/1 adjustable mortgage rates are at 2.750%. FHA does have higher closing costs (APR) because of the upfront mortgage insurance premium and other FHA fees. To help with this issue, FHA mortgages allow seller concessions, gifts and housing grants to be part of the mortgage transaction. FHA mortgages have been leading in mortgage applications even when overall mortgage application activity has decreased.

After almost two weeks into the decreased conforming loan limit, low jumbo mortgage rates are doing just fine and have been somewhat stable, along with other mortgage rates. Jumbo 30 year fixed mortgage rates continue to fluctuate and are currently at 4.750%. Jumbo 15 year fixed mortgage rates are at 4.375% and jumbo 5/1 adjustable mortgage rates are at 3.250%. With more properties now falling back into the jumbo mortgage market, it is important that borrowers have these low jumbo mortgage rates still available. Borrowers will need to have excellent credit to obtain these lowest jumbo mortgage rates with 0.7 to 1% origination point. Jumbo mortgages are not government insured so lenders want to be sure that borrowers are well qualified.

Recent volatility has been keeping markets extremely busy for the past week. MBS prices (mortgage backed securities), which move mortgage rates in the opposite direction, have been on another roller coaster. With daily increases and decreases, no major changes have occurred with mortgage rates which have ended up just sitting still. This week, Fed Chief Ben Bernanke told lawmakers that the Feds are prepared to put in additional help to aid the economic recovery. Investors saw some light at the end of the tunnel after the Institute of Supply Management reported an increase in the service sector work force. Jobless claims rose to 401,000 for the week ending October 1st which was right around what was expected while the Labor Department reported that 103,000 jobs were added in September. This was all positive news for investors who have also been watching the Euro zone crisis closely. Friday's downgrade of Spain and Italy only added more concern about Europe's financial problems. Despite what has been going on, stocks have seen some needed increases while, at the same time, mortgage rates have remained low. Coming up this week, third quarter earning reports will begin to trickle in and, again, may cause a lot of volatility.

Published by Realty Times
Written by Ed Ferrara
October 12, 2011

Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com

Mortgage Rates Fall, Housing Opportunities Getting Better

For four weeks in a row, mortgage rates are seeing historic lows. The 30-year fixed average interest rate fell from 4.09% to 4.01% in the end of September. This marks the lowest rate since 1951.

Also, economists call the 15-year fixed mortgage drop to 3.28% the lowest ever for that loan. It appears they could go even lower as the Federal Reserve announced that it will push long-term rates down further.

These historically low mortgage rates aren't necessarily rapidly selling homes. Across the country contract signings have been down. According to USAToday.com, “July's index fell 5.8% in the Northeast, 3.7% in the Midwest and 2.4% in the West. It rose 2.6% in the South.”

The index of sales agreements, tracked by the National Association of Realtors, showed a 1.2% drop down to 88.6 (100 is considered healthy).

Still the opportunities for homeownership keep getting better. Some markets are more affordable than ever; prices have been cut in half in some metro areas.

Of course, getting a loan can be part of the barrier to entry in the housing market. These days, to qualify for a loan a 20% downpayment coupled with a high credit score are required by some lenders.

Now, a new credit score service being introduced in November claims it will give lenders a more accurate picture of a borrower's outstanding debts. The company's website has a countdown to the release of CoreScore (credit report from CoreLogic). It touts the system as a way to “see borrowers as you've never seen them before.”

Some lenders are being extremely strict because they have difficulty determining previous credit behavior. But according to CoreLogic, everything will soon change. The CoreScore credit report is a supplement, not a replacement for the current credit reporting systems.

According to the company, “The supplemental information the CoreScore credit report provides will expand your view of borrower credit profiles and deliver important insight into unseen risk and opportunities.”

Among the information that the CoreScore report will deliver to lenders are the following:

1. Properties owned—with and without debt obligations Mortgage obligations with companies that may not report to traditional credit reporting agencies

2. Property legal filings, such as notices of default

3. Property tax amounts and payment status

4. Estimated market values on all U.S. properties owned

5. Rental applications and evictions

6. Inquiries and charge-offs from pay-day and online lenders

7. Consumer-specific bankruptcies, liens, judgments and child support obligations

With mortgage restrictions tighter than ever and more supplemental information being offered to lenders about borrowers' debts and credit behavior, it's vital for borrowers to understand the most important qualifying factors that influence lenders.

The chief concern is the ability to repay the loan followed closely by the willingness to repay.

Borrowers can place themselves in better standing with lenders by doing two key things: paying off as much debt as possible before applying for a mortgage. This is always good as it lowers the debt-to-income ratio. Secondly, lenders examine borrowers' track record of repayment to determine how they will behave if they are issued a loan. Making sure that credit behavior is monitored and any discrepancies are handled before applying for a loan will help borrowers have a cleaner record and increase the chances of qualifying for a mortgage.

Published by Realty Times
Written by Phoebe Chongchua
October 7, 2011

Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com

30-Year Fixed Mortgage Rate Falls Below 4 Percent

MCLEAN, Va., -- Freddie Mac (OTC: FMCC) today released the results of its Primary Mortgage Market Survey® (PMMS®), showing the average rate for the conventional 30-year fixed mortgage dropping below 4 percent for the first time in history amid increasing global economic concerns. The 15-year fixed, a popular refinancing option, also fell to the lowest level on record for the sixth consecutive week.

30-year fixed-rate mortgage (FRM) averaged 3.94 percent with an average 0.8 point for the week ending October 6, 2011, down from last week when it averaged 4.01 percent. Last year at this time, the 30-year FRM averaged 4.27 percent.

15-year FRM this week averaged 3.26 percent with an average 0.8 point, down from last week when it averaged 3.28 percent. A year ago at this time, the 15-year FRM averaged 3.72 percent.

5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.96 percent this week, with an average 0.6 point, down from last week when it also averaged 3.02 percent. A year ago, the 5-year ARM averaged 3.47 percent.

1-year Treasury-indexed ARM averaged 2.95 percent this week with an average 0.5 point, up from last week when it averaged 2.83 percent. At this time last year, the 1-year ARM averaged 3.40 percent.

Frank Nothaft, vice president and chief economist at Freddie Mac, reports, "Average 30-year conventional fixed mortgage rates fell below 4 percent for the first time in history this week following a sharp drop in 10-year Treasuries early in the week as concerns over a global recession grew. Average 15-year fixed rates fell to a record low in the PMMS as well. Interest rates for 1-year ARMs, however, rose, as the Fed began replacing $400 billion of its short-term Treasury securities, which serve as benchmarks for many ARMs. Also, in his testimony to Congress's Joint Economic Committee on Tuesday, Federal Reserve Chairman Bernanke said the recovery is close to 'faltering' and stressed the need for lawmakers to act."

"Meanwhile, the Bureau of Economic Analysis (BEA) reported consumer spending inched up 0.2 percent in August, while personal income fell 0.1 percent, the first decline since October 2009. Also, pending home sales declined for the second consecutive month in August, with some of the decline attributed to Hurricane Irene."

October 7, 2011, Published by Realty Times

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Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com

Homeownership's Amazing Benefits

Homeownership brings with it a host of amazing benefits. It's the American Dream for good reason. From health to wealth, it stands out as a great long-term investment, and that's why 67 percent of American households are owner-occupied.

The National Association of Realtors (NAR) knows a little something about how homeownership affects American lives. And that's why they are getting the word out about why you should be a homeowner. According to NAR:

• Homeowners are happier and healthier and enjoy a greater feeling of control over their lives.

• Homeowners pay 80% to 90% of federal income taxes, contributing to federal programs that benefit all Americans.

• Most homeowners enjoy stable housing costs—a fixed rate mortgage payment might not change for 15 or 30 years while rent typically increases 3% a year.

• Children of homeowners … are more likely to participate in organized activities and spend less time in front of the television.

• People who own their own homes … volunteer more and contribute more to their neighborhoods.

• Home owners do not move as frequently as renters, providing more neighborhood stability. In turn, this stability helps reduce crime and supports neighborhood upkeep.

• Children of home owners do better in school, stay in school longer.

Many economists have been touting a jobs recovery as the key to the housing recovery, but perhaps it is the other way around.

Recent data indicates that housing makes up more than 15 percent of our Gross Domestic, and for every home purchased, up to $60,000 is pushed into the economy over time in improvements and furniture.

Additionally, each home sale touches 80 different occupations!

According to the NAR, "America needs jobs. Housing creates jobs. That's one of the many reasons home ownership matters to people, to communities, to America. Strong federal government support of home ownership equals strong support for American jobs. We urge the Obama Administration and the U.S. Congress—as they debate the new federal budget and reform proposals for the nation's mortgage finance system—to continue federal support for home ownership."


Written by Carla Hill
Published by Realty Times

Thinking about Buying or Selling?
Call Alvin's Team Today! 877-651-7810
Or visit our website: www.LivingLakeTahoe.com