Should You Move Up?

You have another baby on the way. Your aging parents have decided to move in. You are starting your own home-based business. There is an endless supply of reasons why a family may need to move up to a bigger, or nicer, home.

How do you know, though, that now is a good time to move up? Let's examine a few issues that will lead you to your answer.

Interest Rates. There is a huge difference between buying a home at 5 percent interest (June 2010), and buying one at, say, 13 percent interest (February 1983). The available rates can change from week to week, and how you qualify depends largely on your credit rating. The first order of business when considering interest rates is to contact a local mortgage lender to find out what rates would be available to you on what loans. Keep in mind rates also vary depending on the type of loan for which you are applying (fixed, adjustable, conforming, jumbo, 30 year, 15 year, etc.).

Income. Moving up to a bigger or nicer house will more than likely mean a bigger mortgage payment. Take an honest look at your budget to see if this makes sense for your family.

Equity. This is one way to avoid a bigger mortgage payment. If you have built substantial equity in your current home, and are selling in a good sellers market where you expect to receive around your asking price, then you could apply your profits from the sale of your current home towards your new mortgage.

Market Conditions. To find out your own local market conditions, contact your local real estate agent, or visit Realty Times. Is your market favoring buyers or sellers? Are homes selling quickly? Are prices appreciating or falling? These are all important questions to answer.

Wish list. Many first homes are starter homes, and as families grow, needs change. Neighborhoods changes as well, as residents age and jobs come and go. Take a moment to consider what area of town would be best for your family. Think about schools, commute times, and neighborhood amenities.

Use these simple issues as a starting point on your journey to a new home. 

Written by Carla Hill
June 10, 2010, Published on Realty Times

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

Rules Change for Getting Home Loans

The Mortgage Bankers Association reported recently that mortgage applications decreased according to their weekly survey (ending 6/18/10). However, some banks are hiring mortgage lenders—a sign that banks are optimistic that requests for housing loans will increase.

J.P. Morgan Chase is planning to hire 1,200 loan officers, according to CNNMoney.com. Christine Holevas, a spokesperson for the bank said, "We may not be inundated with applications tomorrow, but we are confident the need will be there." Despite any slight downturns, expected increases in the mortgage business are estimated to go from $725 billion in 2010 to $916 billion by 2013, according to the Mortgage Bankers Association.

If you're looking to get a home loan here are a few things you should consider. If you're self-employed the rules have changed considerably and not just for mortgages but also personal loans too. Some lending institutions are now requiring self-employed borrowers to provide documentation from assets to income and the documented income is then checked with IRS records. "It used to be nobody checked your IRS records," says one source in the mortgage industry who agreed to be interviewed about the inside changes but could not be named.

Another big change has to do with what borrowers may have done in the past. "When Fannie Mae and Freddie Mac discover loans where the borrowers misrepresented their income, the agencies are requiring the lenders to repurchase the loan from Fannie Mae and Freddie Mac. In turn the lenders then have the option to go after the borrowers in the form of foreclosure—even if the loan is not delinquent," says the source. There's no statute of limitation for fraud. The source says, normally, if the loan is current, they won't pursue the borrower. One major lending institution hired a company to go through all its stated-income loans looking to see if there was fraud. "At first they started with all the delinquent loans and then they moved into performing loans. Then they started requiring lenders to buy back all these loans which put lenders out of business. That closed down some shops," the industry expert told me.

The problem that many self-employed borrowers have today is that they need to be able to show that their business is legitimate in order to get the loan. The typical documentation includes, but is not limited to, a Web site, CPA letter, 411 listing, and business license. And if you're not self-employed, the rules for loans are tight as well—bigger down payments and better documentation are a must. While some lenders will allow as little as 5 percent down, most are looking for more than that. Everything you submit to a lender is now being double-checked.

Doing your part to make sure that your finances are in order prior to applying for a loan ensures a smoother process. Here are just a few helpful tips:

1. Make no major purchases such as a car prior to applying for a loan

2. Have complete documentation of your income

3. Check and clean up your credit before attempting to borrow

4. Reduce the number of outstanding credit options: close unused credit cards

5. Remain current on all your loans

Written by Phoebe Chongchua
July 2, 2010  Published on Realty Times

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Choosing the Best Home

After weeks of searching for your next home, you now have it narrowed down to two great options. One offers a shorter commute, but the other offers more square footage for your growing family. How can you make the best choice?

There are several strategies you can employ in your decision making process. Above all, be confident in your decision making abilities. "The fear of making serious decisions is a new kind of fear, called decidophobia," proclaimed by Walter Kaufmann at Princeton University in 1973. Worry and procrastination do nothing to aid the process, so buyers, be confident that you will make a sound choice.

Pro/Con list: In this case, you are deciding between two houses as your prospective home. For each house, divide a sheet of paper into two columns: pro and con. Be realistic about what the positive and negative factors would be for each purchase. Considerations could include: price, location, schools, repairs, square footage, floorplans, street noise, neighborhood value, comparables, and gut intuition.

Brainstorm scenarios: Chances are, whatever house you decided upon will be your residence for many years to come. Try and think ahead to situations that may arise in the future, and how each residence would affect those situations. Do you have aging parents that could move in? If so, then which house provides the best floorplan for this? Planning on having children? Check out ratings on local schools.

Do the math: Business executives might call this the "cost/benefit analysis." Buying a home is a huge financial decision, and while personal preferences (e.g. location, schools, square footage) all come into play in homebuying, many purchases are based on what makes the best financial sense. Discuss numbers and neighborhood comparables with your real estate agent. One home may be a smaller dollar amount, but the other may be a better deal in the long run. Some neighborhoods are up and coming, while others have come and gone. Are either homes overpriced or underpriced for their neighborhoods? Do either homes need repairs or updates?

Priorities list: Yes, you know you want the pool, landscaping, granite counters, close proximity to work, extra bath, and the list goes on. But when push comes to shove, and it might, what items are your priority, really? For some, driving a longer commute is worth having a larger house or a cheaper price. For other buyers, the exact opposite can be true.

Change perspectives: Sometimes you simply must step out of your own shoes to see a situation clearly. There are many different ways to approach this decision. You can look at it from an emotional point of view (which home do you love), an intuitive view (what does your gut tell you), and even a devil's advocate view (what if). Experts consider this the "Six Thinking Hats," introduced by Edward de Bono in a book of the same title, where you put on six different hats during a decision making process. Try and see the buying process from the perspective of your spouse, your children, friends, and even your worst enemy.

Finally, be realistic in your own abilities. While the final decision rests on your capable shoulders, you should rely on the professionals that are by your side. This includes your agent, lender, attorney, and even your family. And while you are the final say, remember that you have a team to help give you information to fuel that sound decision. 


Written by Carla Hill
June 24, 2010 

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

Going on a Financial Diet

Many Americans live on a margin, spending more than they earn, using credit to make up the difference, and saving at near invisible rates.

Living past their means, they use credit to buy houses, cars, and merchandise that many experts would suggest they really can't afford. This "good life" is great, until the person is no longer able to make their payments. And as unemployment rates hover over 9 percent (U.S. Bureau of Labor Statistics), more and more Americans are finding themselves in this predicament and subsequently facing bankruptcy, foreclosure, and even homelessness.

Journalist Laura Rowley, wrote for Yahoo! Personal Finance earlier this year, "Almost half of Americans reported having trouble keeping up with monthly expenses and bills, according to a 2009 survey on by FINRA Investor Education Foundation. Nearly one-quarter reported overdrawing their checking accounts."

Americans are saving at an alarmingly low rate. According to the Bureau of Economic Statistics (BEA), "Personal saving as a percentage of disposable personal income was 4.0 percent in May." This is up only 0.2 percent from the month earlier.

Are you one of the millions who need to put your debt on a diet?

It's a hot topic these days. So hot, in fact, that talk show giants, like Oprah Winfrey have featured series on how to reduce debt, increase your savings, and secure your own future.

This financial restructuring just might help you save your home one day. Take a moment to look over these tips.

1. Credit Cards: Financial expert Suze Orman said it best, "You must pay more than the minimum payment every month, as much more as you possibly can. If you owe a credit card company $5000 at 18 percent interest and all you do is pay the minimum each month it will take you over 30 years to pay it off." Call your card companies and try to negotiate a better rate, as well. Pay off the cards with the higher interest rates first.

2. Emergency Fund: In today's economy it is important to be prepared for long stretches of unemployment. Each household should have an emergency fund equal to eight months worth of bills. This means if your expenses for one month equal $3,000, you should have at least $24,000 in savings. Laura Rowley reports, "Only 49 percent of FINRA respondents reported that they had set aside funds sufficient to cover expenses for three months in case of sickness, job loss, economic downturn or other emergency."

3. Wants Versus Needs: The best way to start saving more, is to start spending less. In this country we have created of tradition of expecting bigger and better. It may be time to examine your lifestyle and to be realistic about what you can really afford. And that doesn't mean what payment you can afford, but what you can actually afford to buy.

4. Increase Your Income: There may be extra ways for you to have cash coming in, including selling off unneeded items. If your debts are large, you may consider taking on a second or part-time job. If you are a stay at home parent, perhaps you have skills that will allow you to work part time from your house, such as design work or even baby-sitting.

5. Plan for the future. Many Americans have no retirement savings. Consider changing your priorities from "plenty now" to "enough for the future." Exchange the morning Starbucks for savings bonds and IRAs.

Overall, it's about restructuring how you approach life. The saying, "Money can't buy you happiness," couldn't be more true. You may be surprised that exchanging weekend shopping trips and dinner out for family game nights and home-cooked meals may be a welcome change in your family. 

Published on Realty Times. Written by Carla Hill

June 29, 2010 

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30-Year Rate Holds, 15-Yr Mortgage Rate Touches Yet Another Low

30-yr fixed mortgage rates continue to hold at a record low 4.375% for well-qualified borrowers paying a standard .07 to 1 point origination. 15-yr fixed mortgage rates have dipped once again, setting a new record low, at 3.75%, down from 3.875.

FHA mortgage rates are now a tad lower than conforming mortgage rates. 30-yr fixed FHA loan rates are at 4.25%. Despite the slightly lower note rate available at an origination fee of 1 point, APR on an FHA loan at that rate is much higher than that of a conforming mortgage because of FHA fees and MI.

Jumbo mortgage rates are unchanged. Today’s jumbo 30-yr fixed-rate is 5.375%.

Wells Fargo continues to advertise a 30-yr fixed-rate of 4.75% on their website, with an APR of 4.939.

Mortgage-backed securities prices, which drive mortgage rates in the opposite direction, are up early this week cementing rates at the current record low. 

Article Published on Realty Times, June 23, 2010 

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New Criteria for Finding The Perfect Cottage

Finding the perfect cottage is now as complicated as buying an urban home. Beyond seeking out your ideal physical setting and all the nearby amenities that are must-haves for you, here are a few essentials to add to your "my perfect cottage" list:

Location variations: The cottage or summer home has different names in different parts of the country, but it has typically been found in popular cottage-country locations a few hours from an urban centre. With over-development and higher prices in established recreational areas, new more rural areas are opening up and even small towns like Ontario's Creemore have become the summer destination for city folk.

Condos as cottage: Condos have arrived in many recreational areas, with more on the way. Condos can also turn city living into resort-style accommodation with roof gardens, pools, spas, exercise centres and locales that place residents on golf courses, at the waterfront or high above it all, so it's no longer distance that makes an ideal get-away.

Not all or nothing: Fractional or shared ownership offers either a way to afford what is just out of reach financially or a way to use money wisely if you only have a few weeks off each summer. Why pay year-round for a cottage that you can only visit a few short weeks or hurried weekends each summer? Explore this option and you may find you'll get more in the way of amenities and pay less in the long run. Many resort projects also offer access to comparable resorts around the world.

Solar security: If sitting in the sun matters, how much risk is there that neighbours will block your rays? With condos and vertical renovations becoming more popular, blocking other cottagers' sunshine or views is bound to happen. How secure are your privacy, silence, views and everything else?

Internet access: The federal government recently announced about C$76 million in funding to improve internet access through 52 projects in rural Canada. Don't kid yourself—or your kids—that you want to get away from it all at the cottage. Mobile computing, especially the Blackberry-iPhone revolution, has made online the only place to find out about everything. That need does not end for most people seeking out a summer haven. If you intent to work or at least stay in touch with the office, internet access is a must to resolve. Employers favour the electronic leash, so getting online can be part of getting away for cottagers.

Medical access: If the area has a hospital, what medical services does it offer, particularly to seasonal residents? Governments are still slicing and dicing hospitals, so don't be surprised to discover the local hospital has no emergency room or operates one for limited hours. Hospitals and clinics are increasingly narrowing the scope of medical treatments and going mono—one human system, medical procedure or type of patient. It may be what's not available locally that determines where your choice lies.

Water quality: No longer a given, potable or drinkable water is becoming a bonus. With bottled water under the gun, sorting out what drinking and showering water will cost is a genuine financial consideration for where to buy.

Garbage detail: Garbage removal is becoming more expensive everywhere. Recycling efforts differ locally so check with local municipalities for details. Also, find out about proposed future land-fill and sewage dump sites. They're always in the works, so check to be sure you don't end up with an unwanted neighbour.

Electricity costs: Brown-outs and black-outs are more common outside urban areas. Solar power may offer viable alternatives, especially if you can sell excess energy. Self-sufficiency is the ideal, but not always practical. Year-round residents can offer great suggestions on your choices.

Help wanted: Who's going to work in the local shops, restaurants, services and other businesses you count on to fully enjoy your country dream? Labour shortages are stressful for many urban businesses and the cost of transportation in rural areas just adds to the challenge of finding great employees, service people and professionals.

Succession planning: What's the potential for year-round living? That may be far from your thoughts now, but expanding to a full season residence can add value and interest. If you can't, why not? How insurmountable are those obstacles? What are trends in the outlying areas? What is happening with public transportation? What physical barriers are there on the property that must be overcome for mobility problems that may arise or the addition of small children?

How perfect do you want this cottage to be? Prioritize your criteria so you know your absolute must-haves and how to compromise the other criteria without compromising your enjoyment. 

Article published on Realty Times

Written by PJ Wade
June 1, 2010 

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Plenty of Reasons to Buy a Home Even After the Tax Credit

Even though the home buyer tax credit expired on April 30 and won't be renewed, there may never be a better time to buy a home than today, according to the National Association of Home Builders (NAHB). Many outstanding opportunities still exist for home buyers, but they may not be around forever.      

"The home buyer tax credit was just one of many factors motivating Americans to buy homes," said NAHB Chairman Bob Jones, a builder and developer in Bloomfield Hills, Mich. "But buyers can still take advantage of today's low interest rates and competitive prices to get a home they may not have been able to purchase just a few years ago."  

Besides mortgage interest rates that have been hovering at near-record lows, homes in many markets have become more affordable. Prices have moderated from the highs of the housing boom that occurred in most of the country, especially in major markets where they had increased significantly.  

Today's new homes are also built to be much more energy efficient than homes constructed a generation ago, making them more affordable to operate. New homes are designed to support modern lifestyles with open floorplans, flexible spaces, improved safety features, and low-maintenance materials.  

Consumers who are thinking about buying a home should not count on interest rates or prices staying at current levels, however. Mortgage rates are sensitive to market conditions, and even a slight increase can push monthly payments beyond a family's budget. As the country recovers from the recession and people stabilize their financial situations, NAHB economists expect that home prices will begin to increase by 2011.  

NAHB's home buyer brochure "Opportunity Knocks for Home Buyers" describes many of the opportunities in today's market, as well as the long-term financial benefits of homeownership. It provides examples of how interest rates affect monthly mortgage payments and the typical federal tax savings over the first five years of homeownership. The brochure can be downloaded from NAHB's web site at: www.nahb.org/homebuyerbrochure.   

The home buyer tax credit is still available for eligible home buyers who had a signed sales contract by the April 30 deadline and who close by June 30, 2010, as well as for qualified members of the military, foreign service and intelligence communities, who have until April 30, 2011, to sign a contract. 

Article Published on Realty Times

Written by Realty Times Staff

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