Are We Back In the Land of Affordable Housing?

I can hear the sound of gasps as those on bated breath begin to breathe again. This year may be “the end of the housing crash!”, according to The Wall Street Journal, (WSJ).

It seems that housing is again affordable and the bad news is, well, not so bad anymore. According to Simon Constable in the WSJ, the S&P/Case-Shiller home-price index, which tracks 20 markets, dropped 1% in December ... and that is the fifth consecutive decline.

The drum is beating loudly and the tune is “houses are a good deal”. In fact, experts at Mood’s Analytic’s, where income and housing prices are studied, claim houses are more affordable than in decades.

The WSJ reports that, for the first time in 35 years, nationally for the average family, the price of a house basically adds up to the equivalent of 19 months total pay.

Experts are pointing out that housing has dropped so much that the great debate of renting versus owning is clearly leaning toward homeownership.

Timing the real estate market or, for that matter, any market is iffy at best. But when you take a good look at the signs you can see that homebuying is becoming more attractive. Home prices have dropped about 31% from their high in 2006 (based on the S&PCase-Shiller national composite home-price index).

So if you put off buying a home because you were waiting for the best deal, now may be the time to re-launch your search. However, keeping in mind a few homebuying tips will help you navigate through the housing process.

Check your resources. No matter how affordable prices are, remember that buying a home is still likely your largest financial investment. With that in mind, you’ll want to make sure that you’re not just barely economically squeezing into a home.

It’s best to save up and have a solid, healthy downpayment. The new tightened credit rules may insist on a larger cash payment and insulate you from a possible dip in housing prices.

Call your agent. Even if you’ve been tracking the real estate market and watching the drops in your neighbor’s house that’s been on the market for a seemingly endless period of time, call your real estate agent. Why? Because he or she will have the inside scoop on your neighbor’s house and other deals in the community where you’re looking for a home.

I don’t need to spend a lot of time on this one because I’ve written about the importance of using agents in previous columns. It’s simply a good idea to consult with and use an expert when you’re investing a lot of money, time, effort, and–let’s face it–your heart–into something.

Stick around a while. I’m not talking about hanging at the open houses. Nor should buying a home with the intention of flipping it be a high priority right now. If you’re buying a home, plan to stick around a while. The cost of buying a home, moving, and paying for repairs/renovations adds up. However, experts say keeping a goal of owning the house you buy for a while (maybe 10 years) is the better route to take.

Weigh your options. I don’t like wasting time and one thing I could never understand as an agent was people who simply wanted to “window shop” for houses they really couldn’t buy. They would get agents to drive them around all over town looking at homes in price ranges they couldn’t afford. Not my idea of fun–for the agent or the buyers–it’s more like a lesson in frustration. Of course, comparison shopping in your price range is important.

The better option is to weigh your options, meaning know what’s important in housing. Know how much you can really afford to buy. Know your likes and dislikes. Know your needs in housing. Like choosing a mate, you’ll make some compromises. Keep track of what’s important to you by writing down what you hope to find in your next home. Keep the list handy, review it, adjust it during your house-hunting excursions, and then be sure to share your detailed list with your agent to ensure you’re all on the same journey.


Written by Phoebe Chongchua
March 4, 2011

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

Don't Be Mystified By The Mortgage Maze

Years after the housing market tanked and sank the economy, more than 70 percent of Americans say getting a mortgage today is a serious national problem, according to a new study by MortgageMatch.com, a home loan and information site operated by Move, Inc.

According to the MortgageMatch.com survey, today's lending environment is so confusing many borrowers are experiencing high levels of stress and frustration.

More than one in five recent home buyers (20.9 percent) told MortgageMatch.com, waiting to hear if they were approved for a mortgage was more stressful than waiting to hear if they got a job.

MortgageMatch.com says home buyers can significantly improve their chances of getting a mortgage application approved on the best possible terms in today's tough lending marketplace by taking the following steps.

• Pay down your debt as much as you can before applying for a mortgage.

Lenders calculate the ratio of your debt to your income to determine how much you can afford to borrow. Your total debt-to-income is based on how much of your gross income would go toward all of your debt obligations, including mortgage, car loans, child support and alimony, credit card bills, student loans and condominium fees.

By reducing your debt as much as you can, you will improve your debt-to-income ratio and your credit score.

• Clean up your credit long before you apply for a mortgage.

Credit is critical today, not just to get a mortgage but to get the best terms. A marginal credit score can cost you tens of thousands of dollars over the life of the loan. Your score on the 850-point FICO credit rating scale must be 680 today to qualify for a prime loan and at least 720 to get the best rates.

Pull one or all of your three annual credit reports from AnnualCreditReport.com and check yourself, before you wreck yourself.

You'll have to pay a nominal fee of $10 to $15 to each credit bureau -- Equifax, Experian and TransUnion -- to get your credit score. Review your report for errors and omissions.

• Don't make a major purchase on credit and don't apply for new credit before you apply for a mortgage or at any point before your mortgage closes. Purchases and credit accounts increase your debt and hurt your debt-to-income ratio.

• Increase your down payment. The more you put down the better your rate and your chances at scoring on that loan application. If you can't increase your money down, buy a cheaper home. Now is not the time to stretch.

• Get all your docs in a row before you apply for a mortgage. Don't waste time or raise the ire of lenders who are tougher than ever on documentation for income, assets, financial obligations and more. When you apply, have your paperwork ready.

• Know and prepare for your cash requirements. Cash expenses, beyond the down payment can crush you. Closings costs are on the rise. They can include transfer taxes, lenders fees, title insurance, escrow, settlement and home inspection costs. Also upfront property taxes, homeowner association dues homeowner insurance and other costs could come due before you close.

• Larger loans raise your costs. So called "jumbo mortgages" exceed the $417,000 "conforming loan level" in most parts of the country. In high cost areas like New York City, Washington D.C., Miami, and many parts of California, jumbos begin at $729,750. Larger mortgages are more risky so they cost more, require better credit and demand larger down payments.

• Negotiate tough. Ask for a purchase price lower than the value. A lower price serves both you by lowering your loan-to-value ratio and your lender, by reducing its risk. In today's marketplace, many sellers are willing to deal. Go for it.

• Don't get taken. When you see rates attractive rates advertised on the Internet or TV don't froth. They could be come-on or teaser rates with lots of strings attached. In addition, rates change several times during the day and differ by locale, by borrower, by loan-to-value ratio and due to a host of other factors. Advertised rates maybe be what you see, but they are often not what you get.


Written by Broderick Perkins
February 17, 2011

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

Closing Costs Explained

Qualifying and being approved for a mortgage are only part of the financial responsibility of buying a home. There's also a host of closing costs that, as a buyer, you should expect. Affordability is a topic on the minds of today's buyers, so researching each of the following costs, large and small, is important.

1. Down Payment. This amount ranges widely depending on the dollar price of your home, but many financial experts recommend a down payment be at least 20 percent of the total cost of the house.

2. Credit Report and Score: Before you even think about buying a home, you need to verify the accuracy of your credit report and score. You may access your credit report three times a year for free at annualcreditreport.com, but you generally must pay to view your credit score. This costs around $10 - $20.

3. Home inspection: It is imperative that you get a home inspection. Even newer homes may have hidden budget busters, such as termites, mold, or shoddy electrical work. Chances are your offer, unless you are buying "as is", has a clause that allows you to back out of the deal if the home inspection comes back unfavorably. A home inspection takes a few hours, during which you should be present, and costs around $300 to $500.

4. Loan Origination and Points: You may have agreed to pay "points" in order to get a lower interest rate. Think of this as pre-paid interest. For each point purchased, the loan rate is typically reduced by 1/8%. An origination fee is what you must pay the lender to write and process your loan. This can be up to several thousand dollars.

5. Appraisal: An appraisal protects your lender from investing in a property that is over-priced. That means if the home appraises for $200,000, but the seller wants $225,000 ... you will only be able to get financing for $200,000. An appraisal also helps you to know the real market value of the home you are interested in.

6. Private mortgage Insurance: According to the Federal Reserve Bank of San Francisco, "PMI is extra insurance that lenders require from most homebuyers who obtain loans that are more than 80 percent of their new home's value. In other words, buyers with less than a 20 percent down payment are normally required to pay PMI." PMI protects your lender if you default on a loan, something that weighs heavily on the minds of lenders in today's economic climate.

7. Notary fees. Some states have a cap on the amount a notary may charge, while others don't. But you should generally expect a fee less than $10.

The good news? Your lender and real estate agent will provide a "good-faith estimate" of your expected settlement costs. These are only a few of the many costs associated with closings. Planning ahead for these expenses is important, and it is another reason to examine whether or not you can truly afford to buy a home at this time.


Written by Carla Hill
February 24, 2011

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

Dream Home Wish List

There are millions of homes for sale across the country. How do you know which is the right one for you?

The key to getting just the right fit is to develop a wish list. From the lifestyle you want to live to the style of home that best fits your needs, a wish list is a great way for you and your real estate agent to be clear on your objectives.

1. Fixer-upper vs. Move-in ready: Many buyers look at homeownership as a way to make their mark on a property. They are confident in their renovating skills, or are eager to hone them. Part of the appeal may also be that many fixer-upper homes cost considerably less than comparables which are move-in ready. Be sure to sit down and consider what you want homeownership to mean for you.

2. Location: Are you needing to be near public transportation, rail lines, and subways? Keep in mind that in larger metro areas, close proximity to transit can send prices sky high. You'll also want to think about entertainment, restaurants, and night life. Is it important to be near the hustle and bustle, or away from it?

3. Schools: It's no secret. The quality of various public and private schools range widely. Be sure to research school districts before starting your home search.

4. Architectural Style: Some people are drawn to the clean lines and light and bright spaces of a modern design, while others enjoy the cozy charm of a Victorian home. Leaf through magazines, do searches online, and read up in architectural books to decide on what style of home best fits your aesthetic.

5. Upgrades: Are you geared towards granite? Do you marvel at marble? There are certain upgrades that buyers covet. Make a list of what upgrades you would most like to see in your dream home. This can include professional-grade appliances, luxury tiles, or energy efficient upgrades.

6. Interior Styling: If you have allergies, then you may abhor carpet. And while replacing flooring isn't a budget breaker for some, it can be for others. Interior stylings can be changed, but time and money are always a factor. By having in mind the type of interior you most desire, you can cut out homes that will be too much work.

7. Great Yard Expectations: For some buyers, the perfect yard is one that requires zero maintenance (hello, condo owners). For others, however, the ideal yard is large, private, and landscaped. Be sure to contemplate on what best fits your lifestyle.

8. Old vs. New: Old homes can carry a lot of charm, but they can also require hefty maintenance. New homes are not maintenance free, but they may come with certain warranties from the builder to protect you for a few years down the road.

9. To Garage or Not Garage: Do you want a detached or attached garage? Detached garages are perfect for homeowners who work on noisy or smelly projects. This way the house maintains a distance. Other buyers prefer to have a warm walk from the kitchen to their car each morning. What works best for your lifestyle?

10. Detached or Attached: Single-family detached, condo, or income property? There are many choices when it comes to homes. Condo owners love the ease and convenience of living in a community with extra amenities. Single-family dwellers love the privacy and space their homes provide. And income property owners love having a renter that helps pay part of their mortgage.

It's important to remember that chances are you won't get all of the items on your wish list, but having a solid list written out will help guide you in the right direction during the search for your dream home.


Written by Carla Hill
February 22, 2011

Thinking about Buying or Selling?
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
February 17, 2011

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

Explaining Credit Scores

Have you ever wondered what makes up your credit score? The three major credit reporting agencies, Experian, TransUnion, and Equifax, use a number of factors to calculate your score.

Credit scores range from 300 to 850 and are a buyer's key to attaining loans. From cars and homes to everything in-between, if you need a loan, you need good credit. The way it works is simple. A high score is a door to lower interest rates and larger sums of credit. The higher your score, the less of a risk your pose to a lender, and therefore the more likely they'll be to approve you for a loan.

The score is compiled by analyzing the following:

1. Length of Credit History: The longer you've had credit the better. The agencies will be looking at the time that's passed since accounts were opened, the time since account activity, and then the time passed since accounts were opened based on what type of accounts (myfico.com).

2. Payment history: Do you make your payments on time? Have you missed payments or filed for bankruptcy? If you've defaulted on an obligation, your credit score will drop. On the other hand, if you pay faithfully each month, your credit score will rise to reflect it!

3. Percent of Credit Used: Think of it this way. You have two lines of credit open with credit limits of $5,000 each. That means you are able to use a total of $10,000. If you have a $2,000 balance on one card and $3,000 on the other, you are using 50 percent of your available credit. The smaller percentage you are using the better. Fifty-percent is very high.

Many people ask if they should close an unused card. If you are paying monthly or yearly usage fees to the credit card company for a dormant card -- then the answer is probably yes. But keep in mind, if you close one of those $5,000 credit limit cards, your new credit limit is just $5,000. If you now are using $3,000 of your $5,000 limit, you are using 60 percent of your available credit. This is bad news for your score.

And on top of this, how much do you owe total? If you are carrying a large amount of debt, banks and lenders may see you as at risk for default. This means no new loan for you.

4. New Credit: Have you recently opened several new accounts? This is a red flag of risk to lenders. They'll wonder if you're on a spending spree and about what other lines of credit you'll be opening alongside theirs.

5. Types of credit: According to some experts, it is good to have more than one type of credit open. This means to have some credit cards, a mortgage, and installment loans.

6. Settlements: Did you default on a loan? Have you filed for bankruptcy or foreclosure? Did you reach a settlement with a credit card company? These factors will lower your score dramatically, as they show you are a risky borrower.

7. Errors: From identity theft to clerical errors in reporting, mistakes on your report can cost you. You are allowed to view your report three times a year atmyannualcreditreport.com. Check it often to ensure accuracy.

Will a low score haunt you forever? Have no fear, your credit score changes over time. It will rise if you are a responsible spender and make your payments on time. Your credit score truthfully reflects your credit history. So, the power to change it is in your hands.


Written by Carla Hill
February 16, 2011

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

Ways to Increase Your Home's Value

It is no secret. 2010 was a hard year for home values. According to Zillow.com, homes were expected to lose $1.7 trillion in value. This is an even greater loss than what was seen in 2009.

They report that "the bulk of the total value lost during 2010 was in the second half of the year. From January to June, the housing market lost $680 billion. From June to December, Zillow projects residential home value losses will top $1 trillion."

Some of the largest losses in value were seen in the West. Los Angeles' values fell by $38,000 over the course of 2010. And they are down a whopping $676,000 from the peak in the second quarter of 2006. Phoenix, Arizona, saw values falls by $36,000 in 2010. This is down $222,000 from peak times.

There were exceptions to this loss trend. The Boston metropolitan statistical area (MSA) gained $10.8 billion in value, while the San Diego MSA gained $10.2 billion.

Now, while you cannot protect yourself against market corrections such as these, you can take small steps to help increase your home's value and make it more marketable. The following tips are meant to inspire and motivate you to treat your home like the investment it was meant to be.

1. Make Repairs: Homes require regular maintenance and repairs are a necessary component of homeownership. Procrastination gets you nowhere when it comes to home value. Stay on top of repairs as they are needed. And be sure to address large projects before placing your home on the market. For example, roofs are expensive to replace or repair. Many buyers will pass up your otherwise wonderful home when faced with roof issues.

2. Curb Appeal: Curb appeal is about first impressions. It is also about neighborhood values. Drive down a street lined with manicured lawns and well-maintained homes and the values are sure to reflect the care their owners take. On the other hand, streets with overgrown trees, junky yards, and chipped and faded paint are fighting an uphill battle in the values game.

3. Community Involvement: The classic quote from Chinese philosopher Lao-tzu says, "A journey of 1,00 miles begins with a single step." This is especially true for improving the health and wealth of a community. Change starts with yourself. By becoming an active member of your community, you can inspire the change you desire. Family, friends, and neighbors will follow your lead of civic duty. How can you get involved? Run for city council, join the PTA, volunteer, and help organize fund raisers and events that inspire community togetherness.

4. Updated Kitchen: Kitchens are a real selling point. Outdated cabinets, counters, and appliances will stick out like a sore thumb to buyers. Be sure, however, that you research your comparables before beginning a remodel. You don't want to price yourself out of the running. This means if while you love granite and travertine, other homes in your area are selling with laminate, you will probably not be able to ask for a drastically higher price that covers the price of the granite.

5. Updated Bath: Bathrooms also hold much of a home's value. New low-flush toilets cost as little as $100. And tubs and showers can be easily replaced or resurfaced. Be sure, above all else, that your bathrooms are clean for showings.

6. Energy Savers: Buyers are looking for homes that are energy efficient. Low-flush toilets, solar panels, water filtrations systems, and insulated windows are all inexpensive fixes for energy zappers.

Consider these simple tips and decide for yourself what may help your home retain its value.


Written by Carla Hill
February 9, 2011

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