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Rick's News Column
FLORIDA MARKET APPEARS TO BE STABILIZING
The Florida housing market has been one of the hardest hit in the country, but sales of single-family homes rose in Florida in July. It was the first increase in sales in more than two years.
While only six more homes sold in July 2008 than in July 2007, it could indicate stabilization in Florida's housing sector, according to the latest housing statistics released by the Florida Association of REALTORS®.
Florida's median sales price for existing homes last month was $193,600, down 19 percent from July a year ago. But that number isn’t so dramatic when you consider that the statewide existing-home median price was $164,000 in 2003.
More than half of Florida's metropolitan statistical areas reported increased sales of existing homes in July; seven MSAs also showed gains in condo sales.
Source: Florida Association of REALTORS® (08/25/2008)
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MORTGAGE RATES
Rates on 30-year mortgages, which averaged 6.47 percent fell slightly to the lowest level since mid-July.
Read the full story:
www.floridarealtors.org
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TAX PORTABILITY
Not as many homeowners appear to be taking advantage of portable tax savings as had been hoped, according to some analysts. "Unfortunately, the credit crunch hit at the same time as portability," says John Mike, president of the Realtors Association of the Palm Beaches. "If we weren't experiencing that, portability would be really, really impressing people."
Read the full story:
www.floridarealtors.org
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INTERNATIONAL
Florida remains by far the most popular location for foreign buyers of real estate, accounting for 25.4 percent of all international purchases in the U.S., according to NAR's latest research. The report noted that 35.5 percent of Florida Realtors surveyed said their international business has grown in the past five years.
Canadians, aided by a strong Canadian dollar, were the No. 1 group of international buyers, accounting for nearly a quarter of all foreign buyers in the year ended May 2008. That was nearly twice the share the Canadians represented a year earlier.
Florida was the choice for 33 percent of all Canadian purchases in the United States.
Mexicans, who were the No. 1 group of international buyers last year, dropped to third place, behind the British and Canadians. Forty-two percent of all British buyers chose Florida.
Rounding out the top six were: China, India, and Germany. Buyers from China favored California, which captured 25 percent of their U.S. purchases, but Florida was No. 2 with 11 percent. Fifty-four percent of German buyers picked the Sunshine State.
After Florida, other top states for foreign buyers are California, Arizona and Texas.
Despite the current downturn, 35.5 percent of Florida Realtors surveyed said their international business has grown in the past five years, the report said. Some 52.6 percent in Florida reported their foreign business remained about the same, and only 11.8 percent indicated foreign business had decreased.
Thirty-eight percent of the Realtors thought the weak dollar was having a significant impact on foreign buyers looking in the United States, the study said.
- The Miami Herald, Martha Brannigan. Distributed by McClatchy-Tribune Information Services.
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FIRST-TIME HOMEBUYERS
A provision of the recently-passed federal housing recovery bill gives first-time buyers an interest-free loan of up to $7,500 in the form of an income tax credit. The benefit ends June 30, 2009.
Read the full story:
www.floridarealtors.org
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SHORT SALES
Short sales sound like a dream: The seller escapes foreclosure. The buyer gets a bargain price. The bank holding the home loan eats the difference. But the deals can be incredibly cumbersome to negotiate, and in an NAR survey, 94 percent of Realtors who have worked with a short sale say they have had problems.
Read the full story:
www.floridarealtors.org
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FAKE TV HELPS HOMES LOOK OCCUPIED
It’s common knowledge that vacant homes are prime targets for burglars and vandals.
Now a company has developed an inexpensive way to give off the appearance that there are people living in the home—or at least watching TV there.
Eden Prairie, Minn-based Opto-Electronic Design says “FakeTV” is a burglar deterrent device that gives off light in just the way a real television does, so from outside the home it looks like the home is occupied.
A built-in light sensor turns FakeTV on at dusk, and it stays on for a preset time. Computer-controlled LEDs reproduce the scene changes, color shifts, flicks and fades of a real television.
“When the burglar sees the light from an operating television, his imagination supplies the image of the person watching it,” the company said in a press release, noting that modern televisions turn on with push buttons, so they cannot be put on timers.
The usual tips remain the first line of defense for a vacant property: keep the yard maintained, stop the mail, and frequently clear away advertising material that gets left at the door.
FakeTV costs $39.99 and is available at www.FakeTV.com or by calling or call 888/621-5800.
—REALTOR® Magazine Online
Daily Real Estate News | July 23, 2008
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CONDO CONVERSIONS
Condo conversions were like a game of musical chairs - the last projects to convert lost out when the real estate market stalled. Now many of those condo-conversion owners find that the developer has retained controlling interest in the property, and they have almost no say in the operation.
Read the full story:
www.floridarealtors.org
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SHORT SALES: A TOUGH ROAD
Read the full Story:
www.sun-sentinel.com
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ONLINE HOME VALUES
Consumers love real estate Web sites that offer an immediate estimate of a home's worth, and some Internet users are almost addicted to seeing fluctuations in their home's value. One problem, however: The percentage of error is still "very large," making any single home's estimate almost worthless.
Read the full story:
www.floridarealtors.org
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GOING BEYOND THE CREDIT SCORE
Fair Isaac Corp. and the credit bureaus have rolled out numerous products to provide lenders and investors with alternatives to the FICO score in assessing borrowers' default risk.
The Credit Capacity Index from Fair Isaac gauges how well borrowers manage incremental debt, while Trend Data from TransUnion gauges the performance of loan portfolios when specific variables and regional economic indicators are factored in.
Steps also are being taken to improve the tools available to mortgage lenders to assess default risk, with industry experts pointing out that FICO scores were inadequate on their own because credit bureaus receive mortgage data without knowing the type of loan and are not given access to copious amounts of data on the performance of loans held in lenders' portfolios.
National Bank of Kansas, for instance, is going beyond the FICO score, also using a fraud score, risk profile, appraisal review and an expanded team of risk managers and underwriters to reduce default risk.
Source: American Banker, Kate Berry (06/18/08)
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BE IT EVER SO ILLOGICAL: HOMEOWNERS WHO WON'T CUT THE PRICE
For both economic and psychological reasons, there is no asset more conducive to hopeful overvaluation than real estate.
Read the full story:
www.nytimes.com
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SHORT SALES
What exactly is a "short sale"? NAR may decide the answer at its meetings in May. Technically, it's not a short sale until a bank agrees to accept less money than it's owed for a mortgage loan, and that raises questions on how some listings should be presented in the MLS.
Read the full story:
www.floridarealtors.org
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FLOOD FACTS
With two mouse clicks, a homeowner - or homebuyer thinking about making an offer - can find a property's potential risk from flooding. FEMA keeps a record of every address in America at www.floodsmart.gov . For a floodplain map, go to msc.fema.gov . To apply for flood assistance or get more information, visit FEMA's Web site at: www.fema.gov
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CO-OP BOARDS HAVE RIGHT TO BE SNOBBY
The CEO of a Boston-area chain of skin-care salons is settling his lawsuit against a city housing cooperative that refused to allow him to buy in because he didn’t have a sufficiently prestigious background.
John Walsh, who grew up in a Boston housing project and dropped out of college, said that co-op members, led by the board's president refused to allow him to move in because Walsh "was not of the same social status" as the rest of the residents. Co-op officials refused to comment.
Massachusetts State Rep. Barry Finegold, an Andover Democrat, is working with state Sen. Bruce Tarr, a Gloucester Republican, to introduce a bill that would limit such rejections to financial considerations.
But observers say that neither the settlement nor the potential passage of a new law in Massachusetts is unlikely to make a long-term difference.
That's because courts have consistently ruled that cooperative buildings are essentially private clubs, giving boards the right to turn down anyone they want as long as no one can prove they have broken laws barring discrimination based on things like race, sex, or age.
Co-ops are much more common in New York than in Boston, where prospective owners are frequently rejected without knowing why. Singer Barbra Streisand, clothing designer Calvin Klein, and casino entrepreneur Steve Wynn are among those rejected by New York co-ops.
Source: The Boston Globe, Kimberly Blanton (05/30/08)
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BE 'FIREWISE'
Fire researchers say that even 30 feet of defensible space around a home can greatly decrease the probability of structure damage or loss due to a wildfire - a constant danger during Florida's dry season. Florida Agriculture and Consumer Services Commissioner Charles H. Bronson urges state residents to take action and points to three problem areas that can be corrected inexpensively:
• Roof and gutters: Remove all dead leaves, pine needles, small twigs and palm fronds - anything that can ignite easily by falling embers.
• Sides of the home: Remove dead vegetation and combustibles such as firewood piles.
• Area within 30 feet of the home: Remove dead vegetation, keep grass cut and watered, remove any vines stretching from wild land to the home or into trees, and prune dead limbs from trees and bushes.
For more "Firewise" tips, visit the Florida Division of Forestry web site at www.fl-dof.com
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FORT LAUDERDALE: CITY RECEIVES AN ARRAY OF DEVELOPMENT PLANS
May 15, 2008
More development plans are filing in to the city. Some of the latest proposals include a giant hotel-housing complex at the beach, a couple of small housing developments, and another downtown hotel.
EL-AD Fl Beach LLC has been working on plans for a hotel-residential project near the corner of Las Olas Boulevard where it hits the beach. The address is 2939 Banyan St., and the plan is for 41 multi-family residential units and a 256-room hotel, plus 5,510 square feet of retail space.
A Marriott Courtyard hotel with 162 rooms is proposed for 33 NE Second St., downtown, by Claridge Homes Downtown LLC, according to city development agendas.
A 12-townhouse development called Dixie Park Townhomes is proposed at 725 NE 14th St., and a seven-unit residential project called Middle River Place is proposed at 1451 NE 10th Ave.
One of the larger plans submitted for approval lately is Riverbend Corporate Park, the office complex under construction at 2201 W. Broward Blvd. A site plan is in City Hall now for a 43,000-square-foot parking garage, almost 20,000 square feet of retail, and 127,384 square feet of office with 5,502 square feet of retail added to the previously approved buildings on that property.
Plans are open for public viewing at the city's development One-Stop Shop at 700 NW 19th Ave. off Sistrunk Boulevard.
South Florida Sun-Sentinel
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FLORIDIANS: DON'T DELAY IN GETTING FLOOD INSURANCE
Read the full story:
www.floridarealtors.org
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CONDO OWNERS FACE RENTAL DILEMMA
Condo owners who can’t sell their units often consider leasing the space to tenants until the market improves. Yet, increasingly, such owners are discovering that their condo association has rules preventing them from doing so.
Rental policies vary by condo association, but generally associations limit the percentage of units that can be occupied by tenants. Some communities require owners to submit the lease they plan to use to the condo board for approval.
The rental restrictions are meant to guard against the condo being viewed as a risky investment by lenders who believe that buildings with a high concentration of rentals are harder to market to homebuyers. Fannie Mae will not guarantee a loan for a condo in which renters make up more than 49 percent of the occupants.
The rules generally stem from a feeling that renters don’t take good care of a unit and can reduce the value of the unit.
Source: The Washington Post, Renae Merle
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FLORIDA PORTABILITY 101
View chart below:
www.floridarealtors.org
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MORTGAGE TAX DEDUCTIONS
Bought a home in 2007 where you had to take out private mortgage insurance? It's deductible on your federal taxes for the first time this year - and through 2010 if the household makes less than $100,000 per year.
Read the full story:
www.floridarealtors.org
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MISSED THE HOMESTEAD OR PORTABILITY FILING DEADLINE?”
Dear Lori (Property Appraiser):
I missed the March deadline for filing both my Homestead
Exemption and Portability Applications. Is there anything I can do to get my 2008 tax exemptions?
- L.C., Dania Beach, FL
Don’t worry. Florida law allows for late filing for the Tax Year 2008 through September 18, 2008. Our office accepts late Homestead applications and helps taxpayers prepare the required petitions to the Broward County Value Adjustment Board (VAB) for all eligible properties. To claim a 2008 Homestead, you must have purchased, be named on the title, and moved onto the property on or before January 1, 2008. In January, Florida voters approved Amendment One, a constitutional amendment that makes some or all of the Save Our Homes (SOH) benefit portable. Portability allows Homestead Exemption holders to transfer some or all of their SOH benefit from their old home to their new home. As of the March 3rd traditional filing deadline over 4000 applications for portability have been filed in Broward County. The first year that homesteaders can take advantage of this benefit is 2008. If you had a Florida Homestead Exemption in 2007, and gave up the exemption and moved to a new homestead by January 1, 2008, you are eligible for portability. To receive this benefit, you must apply for both the Homestead Exemption and Portability. The application and petition are available at our main office, our branch office, or online at www.bcpa.net . Our BCPA staff will help you complete the form if you need assistance. The petition must be accompanied by a non-refundable filing fee of $15.00 made payable to the Broward County Value Adjustment Board. Call our Customer Service staff at 954.357.6870 if you have any questions or need help with your tax exemption applications.
Sincerely,
Lori
If you have a question for the Property Appraiser, please email Lori at MailTo:lori@bcpa.net or write to her at the Broward County Property Appraiser's Office, 115 S. Andrews Avenue, Room 111, Fort Lauderdale, FL 33301
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GREAT TIME TO BUY
Too many buyers are focusing on home prices and waiting to jump into the market, afraid that a property bought today will be worth less tomorrow. But rising mortgage rates should also be a concern, and many potential buyers could find themselves out of luck if they wait much longer.
Read the full story:
www.floridarealtors.org
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FORT LAUDERDALE/NORTHCENTRAL BROWARD COUNTY DEVELOPMENT FORUM/THREAD
www.urbanplanet.org
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WHY BUY A FLORIDA HOME NOW? LARGE INVENTORIES OFFER OPTIONS, SAY FLORIDA REALTORS®
ORLANDO, Fla., – Florida’s real estate market has started a new year with the largest selection of homes and condominiums available for buyers in more than a decade. But factor in a continuing inflow of new residents to Florida and means that inventory levels are likely to decline in 2008.
Read the full story:
media.floridarealtors.org
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FORECLOSURES: BARGAIN HUNTERS BEWARE!
You might think that a slowing real estate market would make foreclosure investing a snap. Don't bet on it. Source: CNN/Money.
Read Full Story:
money.cnn.com
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CREDIT REPAIR EASES HOME BUYING
Anyone who is contemplating buying real estate should first consider a financial housecleaning.
Getting a mortgage has gotten more difficult, even for people with excellent credit. So it pays for potential buyers to examine their credit history.
Here are some smart steps to suggest potential buyers take:
Get a credit report. Credit reports are available free at www.Annualcreditreport.com . Examine it for incorrect information, such as closed credit accounts or debts belonging to someone else with a similar name. Address any problems such as delinquent bills.
Credit score improvement. It takes a credit score above 680 to get a mortgage. Scores higher than 720 rate better deals. Expect to pay a surcharge on credit scores lower than 680.
Consider FHA loans. FHA borrowers pay a small insurance premium, but only a 3 percent down payment. Borrowers must have a steady job, be able to verify income, have a record of paying bills on time and keep the loan amount to no more than 31 percent of gross income.
Avoid jumbo loans. Conventional loans are significantly cheaper than loans above $417,000.
Daily Real Estate News | February 7, 2008. Source: The Boston Globe, Andrew Caffrey, Binyamin Appelbaum (02/03/2008)
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REMODELING BUDGET ESTIMATOR
Find out how much your home-improvement project may cost – localized for your own city!
www.costestimator.com
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WHY BUY A FLORIDA HOME NOW? AN APPEALING LIFESTYLE
PLUS GREAT VALUE, SAY FLORIDA REALTORS®
ORLANDO, Fla. – With its cosmopolitan cities, world-class beaches, golf, boating and sports, Florida offers an attractive lifestyle to buyers from around the world.
Read the full story:
media.floridarealtors.org
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INSURERS FAVOR HIGH-VALUE HOMES
Insurers are offering owners of multi-million-dollar coastal homes insurance packages that — while costly — provide extensive coverage not usually available to owners of lesser properties.
Read the full story:
www.realtor.org
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GROUPS WARN SENIORS TO BEWARE OF REVERSE MORTGAGES
The U.S. senior community is warming up to reverse mortgages, but the product's increasing popularity also is breeding a new crop of unscrupulous brokers, lenders, and loan agents who are taking advantage of the nation's elderly.
Read the full story:
www.realtor.org
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ADVICE TO BUYERS: SPEND CAUTIOUSLY BEFORE CLOSING
Home buyers should take care not to run up a lot of debt between the time they are approved for a mortgage and the day they go to the closing table.
Many lenders are pulling credit history and credit scores within a week of a buyer’s scheduled closing date just to make sure nothing major has changed. What the lender doesn’t want to see is a huge run-up of credit-card debt or other loans.
The lender also may require the borrower to sign a statement at closing affirming that there has been no change in the borrower's financial ability to repay the loan and that the borrower's employment status remains the same.
Home buyers should be particularly cautious not to throw their debt ratio out of whack by buying things for the new home before they own it because the added debt might change their credit score and the lender may no longer be willing to lend them money at the rate promised, or maybe not at all.
The best advice, experts say, is to wait to do that shopping until after closing.
Source: Ilyce Glink, Real Estate Matters Syndicate (11/09/2007)Daily Real Estate News | November 12, 2007
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HOMEBUYERS
Homebuyers have many properties to choose from, but can nix one as a possibility quickly if it has a problem that traditionally spooks buyers – even if the problem would cost only pennies to repair.
Read the full story:
www.floridarealtors.org
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6 SANITY-SAVING RULES FOR NEW LANDLORDS
Thinking of becoming a landlord? It's not as easy as you might think. Experts share six rules that will help you find good tenants and make money.
Read the full story:
www.realtor.org
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ARM BORROWERS DON’T KNOW THE TERMS
A national survey of 500 adjustable-rate mortgage borrowers found that 73 percent don’t know how much their monthly mortgage payment will increase the next time the rates go up. The survey, which was conducted for the AFL-CIO labor union, indicates that borrowers are unprepared for the burden of higher mortgage payments. One in five borrowers don’t know their current loan rate, and 25 percent don’t know when their lender will raise the rate. “Predatory lending practices not only involve sticking consumers with bad loans, but also failing to provide homeowners with the basic information they need to survive in this market,” AFL-CIO President John Sweeney said in a statement.
Source: Reuters News, Patrick Rucker (10/14/2007)
© Copyright 2007 INFORMATION, INC. Bethesda, MD (301) 215-
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FOR MOST BUYERS, THE MORTGAGE MARKET IS HEALTHY
The widespread notion that the entire mortgage market is in crisis is just plain wrong, say lenders in various parts of the country.
The majority of mortgage products have been unaffected by troubles in the subprime segment. Interest rates for 30-year, fixed-rated loans remain in the low 6 percent range for people with reasonably good, though not necessarily perfect, credit records, according Kenneth R. Harney, managing director of the National Real Estate Development Center and syndicated columnist.
While there is plenty of money to lend, Harney says underwriting standards are more strict than they were a year ago. Jumbo loans, for example, often require two appraisals – one by an appraiser selected by the lender and the other by one working for the investor.
Similarly, FICO credit-score standards generally are higher than a year ago, stated-income mortgages with no verifications are hard to find and lenders are especially wary of excessive "layering of risk" – combining low down payments with marginal credit scores and high debt-to-income ratios – in markets where prices are trending lower.
Source: The Washington Post Writers Group, Kenneth R. Harney (09/29/2007)
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FACING FORECLOSURE? FIGHT IS BETTER THAN FLIGHT
Financially stressed homeowners have options instead of just moving out.
Read the full story:
www.msnbc.msn.com
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CAUGHT BETWEEN TWO HOUSES
You've found a new house, but your hold one is still on the market. How to juggle two homes and bridge the financing gap.
Read the full story:
money.cnn.com
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A TAXING EFFECT
The analysis is in, and it’s ponderous. A comprehensive study of Florida property tax laws – ordered by the Florida Legislature and conducted by a team of economists from the University of Florida and Florida State University – was released yesterday. Issued in three parts, the entire study has 689 pages and sometimes-challenging text. But it does study the state’s property tax problems from all angles. For example, the study finds that only 9.2 percent of Florida households would be better off keeping their Save Our Homes exemption if the proposed property tax amendment passes in January – but the authors also note that far more would opt to keep SOH under that scenario. To download the complete report or any one of the three parts, go to: edr.state.fl.us
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City of Fort Lauderdale Encourages Residents and Business Owners to Register for CodeRED™ Emergency Notification Service
System Delivers Emergency Messages Directly to Registered Phone Numbers
Monique Damiano, Public Information Specialist
Public Works Department
For Media Only: (954) 828-7808
Mailto:mdamiano@fortlauderdale.gov
Fort Lauderdale - The City of Fort Lauderdale encourages residents and business owners to register for CodeRED™, a high-speed telephone notification system that delivers emergency information to registered phone numbers. In the event of a hurricane, utility outage, water main break, terrorist incident, or other crisis, the City will activate CodeRED™ to send emergency notifications to registered users.
Residents and business owners can sign up for CodeRED™ on the City’s website at www.fortlauderdale.gov or by calling the 24-hour Customer Service Center at 954-828-8000. The service is limited to Fort Lauderdale addresses and all personal information is kept confidential. Individuals who have already registered for the service but would like to update their phone number can do so by reregistering. There is no fee to register for or participate in the service.
When CodeRED™ distributes an emergency notification, the City’s Customer Service phone number, 954-828-8000, appears on the caller ID. The system then delivers a message to the person answering the call or leaves a message on an answering machine or voicemail service. The system makes three attempts to connect to a registered number.
CodeRED™ notifications cannot be delivered to phone numbers with a privacy lock feature. To ensure messages are received, residents should either turn off the privacy lock feature during emergencies, enter 954-828-8000 on their “safe list” of phone numbers, or enter a cell phone number when registering for the service.
For more information about registering for the City’s CodeRED™ notification system, please call the 24-hour Customer Service Center at 954-828-8000.
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BUYER INCENTIVES
To spark buyers’ interest, sellers should consider practical incentives that focus on home price and monthly mortgage payments, instead of offering material perks such as fancy televisions.
Read the full story:
www.floridarealtors.org
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HOME IMPROVEMENTS
How long will a home improvement actually remain an improvement? How long do new wood floors last? New stoves? A new countertop? NAHB conducted a study that tries to determine the lifespan of home components.
Read the full story:
www.floridarealtors.org
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FSBOS: FEWER GOING IT ALONE
NAR reports a drop in the number of for-sale-by-owner (FSBO) transactions to 12 percent of all sales from 18 percent in 1997. NAR spokesman Walter Molony says property owners believe agents are better equipped to achieve fast sales at top dollar in a slow market, adding that the median price for agent-assisted transactions was about 16 percent higher than FSBO sales last year. Molony notes that agents orchestrate showings, handle paperwork and identify serious buyers for sellers – who often lack the time or experience necessary to complete such tasks. NAR's 2006 Profile of Home Buyers and Sellers shows that 5 percent of sales from mid-2005 to mid-2006 involved FSBO sellers turning to an agent, with only 1 percent of sales involving sellers who abandoned their agents to go it alone.
Source: Investor's Business Daily P. A8; Kelly, Brad
© Copyright 2007 INFORMATION, INC. Bethesda, MD
(301) 215-4688
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FREE MORTGAGE PRIMER
Confused about the array of affordable mortgage products that sound too good to be true? Try this: A new pamphlet jointly released by five bank, thrift and credit union regulators. The 17-page document, available on the agencies' Web sites and downloadable in PDF format, discusses non-traditional mortgage products, such as interest-only and adjustable-rate loans. Its list of terms and worksheet should help consumers determine which type of loan best suits their needs. The regulators say consumers also can turn to lenders if they have questions about the risks of the various lending options. To download the brochure, go to:
www.federalreserve.gov
Source: American Banker (10/20/06) Sloan, Steven © Copyright 2006 INFORMATION, INC. Bethesda, MD
(301) 215-4688
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In ARM's Way
Are you saddled with a mortgage that threatens to turn your dream home into a nightmare? In 2005, 40 percent of home sales were second homes, many of them bought for retirement with an adjustable-rate mortgage, or ARM. An ARM is enticing. It has an attractive introductory rate ("teaser rate") that is fixed for the first few years - until it resets based on prevailing rates. But the Federal Reserve has raised rates so aggressively over the past two years that many homeowners, once their introductory rate expires, have seen their payment jump anywhere from 10 to 50 percent.
According to the RealtyTrac U.S. Foreclosure Market Report, foreclosures nationwide went up 25 percent from June 2005 to June 2006. And the problem is likely to get worse: More than $2 trillion worth of mortgages are due to reset in the next few years.
What to do if your house payments go through the roof:
1) Make your payments and hope that rates fall, especially if you're planning to sell or if your payments will increase only slightly.
2) Sell or downsize to a rental or home with a smaller mortgage.
3) If you risk foreclosure, act aggressively. Contact the Department of Housing and Urban Development at (800) 569-4287 or go to www.hud.gov for information on local counseling agencies. Work with your lender to extend the mortgage or to get a one-time loan from the Federal Housing Authority insurance fund to pay past-due balances on the mortgage.
4) Refinance. Either convert your ARM to a fixed rate or find a different mortgage. if you're planning to live in your house for more than five years, a fixed-rate mortgage is probably your best bet.
-Joe Hearn, AARP Bulletin, September 2006
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HOMEBUYERS
WASHINGTON -- Too often, renters look at their current monthly rent payment, compare it to the cost of owning a home, and decide the latter is "something I can't afford." But the financial advantage of homeownership, from property appreciation to income tax deductions, makes renting more expensive. Renting can cost seven times more annually than owning.
“Housing is a good investment, and owning a home makes sense for a lot of current renters, but many would-be homeowners are reluctant to take those first steps,” says NAR President Thomas M. Stevens.
The Federal Reserve Board estimates that homeowners have a net worth nearly 36 times more than renters. Over the past 10 years, the cost of rental housing in the United States has increased an average of 3 percent per year; average rents are projected to rise 4.1 percent this year alone. With a 3 percent annual increase, a current rental payment of $1,000 per month would increase every year and amount to $137,567 after 10 years, with no wealth accumulation.
In contrast, a $210,000 home purchased today with a downpayment of $10,000 and a 20-year fixed rate mortgage at 6.5 percent would cost a steady $1,100 per month and yield a net worth of $138,521 after 10 years, assuming an historic 4.5 percent annual appreciation rate.
© FLORIDA ASSOCIATION OF REALTORS®
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TIPS FOR BEAUTIFYING A HOUSE
When potential buyers look at a half-dozen similar homes, chances are the one they will buy is the one they consider the “prettiest one,” says Mark Nash, real estate professional and author of "1001 Tips for Buying & Selling a Home." Here are six tips for making sure that your home is the prettiest.
First, strip away the window coverings - especially heavy drapes - and replace them with simple shades, then have the windows cleaned by a pro. Update lighting fixtures and replace stodgy chandeliers and ceiling fixtures with something contemporary. Remove all the old wallpaper, as some homebuyers won’t consider a property if there is wallpaper on the walls. Get rid of ratty furniture and rent new pieces if necessary. Neutralize kids’ rooms – remove the evidence that the child is a boy or a girl. And finally, get rid of all of the family pictures.
Source: St. Paul Pioneer Press (07/01/2006) © Copyright 2006 INFORMATION, INC. Bethesda, MD
(301) 215-4688
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FLOOD INSURANCE: DECIDE NOW
To learn whether a homeowner needs flood insurance, start by finding out whether the property is in an area designated by the Federal Emergency Management Agency as a high flood risk. Simply enter the property’s address on FEMA's Flood Smart Web site ( www.floodsmart.gov/floodsmart/pages/riskassesment/findpropertyform.jsp;jsessionid=4A432C4509946B9B67AAF4C4E46DC579 ). If the Web site says the area is high risk, it’s smart -- and probably required by mortgage lenders -- to have insurance. But even if the Web site indicates that the property has a low to moderate risk of flooding, it is worth consulting neighbors and the local planning agency about past floods in the area. The government sets rates so premiums are the same no matter where the insurance is purchased. Policies are restricted to $250,000 on the structure and $100,000 on contents -- sold separately with a discount for buying both.
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WHY IT'S GENERATION Y
Generation Y homebuyers are fearless shoppers changing the way moderately-priced homes are sold, say observers of this tech-savvy group. “They already have their minds made up before they get in the car,” says Justin Juarez, broker-owner of Metro Brokers Liberty Home Group in Denver. The 65.3 million members of Generation Y -- people born between 1979 and 1994 -- are always looking for the best deal, says Angela Burdick, owner of Angela Burdick Real Estate. “Location is very important to this group. They like light rail and public transportation and walking where they want to be. They value their recreational time, and they don't want to be home mowing lawns.”
Gen-Y also doesn't shy away from spaces as small as 500 square feet. “They're really into organization and multifunction of furniture,” Burdick observes. “You see a lot of Murphy beds, and they like multifunctional rooms.”
Source: Denver Post, Margaret Jackson © Copyright INFORMATION, INC. Bethesda, MD
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THANKS, MOM AND DAD
The number of first-time homebuyers who use monetary gifts from family or friends to make a downpayment on a house has increased to 25 percent from 20 percent over the past 10 years. The Internal Revenue Service taxes gifts of $12,000 or more, so it might benefit some parents to set up an intra-family mortgage. Children can benefit from below- market interest rates -- though they must pay the applicable federal rate of about 4.5 percent to avoid gift taxes -- flexible payment schedules, the absence of credit checks and lower closing costs. They can also deduct the interest from their income taxes, provided that there is a deed of trust and the mortgage is recorded with the county clerk. While the parents can benefit from steady cash flow during retirement years, it's best to avoid an intra-family loan solely as an investment, however. Most people can earn higher financial returns elsewhere.
Source: Wall Street Journal Gullapalli, Diya © Copyright 2006 INFORMATION, INC. Bethesda, MD
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LOSING CREDIT
A key rule for homebuyers: Don't do anything that would hurt your credit score. But a lot of savvy Internet users hurt their credit scores inadvertently because the act of applying for a mortgage can, by itself, lower a borrower's credit score, and applying is easy to do online. A loan inquiry raises a red flag to lenders, suggesting a possible financial problem, and multiple loan inquiries automatically lower a credit score if done over a period of time. To offset problems for mortgage shoppers, most credit scores ignore multiple mortgage applications submitted within the 30 days prior to a credit check because they assume people will shop around for the best rate. Beyond 30 days, credit scores will consider mortgage inquiries as separate events within each 14-day period. Anyone who shops for a loan for three months could find themselves getting offers and interest rates that are progressively less attractive. Best advice for buyers: Use the Internet for research but only apply for a mortgage when you're ready to make a commitment, apply to a handful of companies, and make a decision within 30 days. Source: Planet Realtor.
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SOLAR PANELS IN AS ENERGY PRICES RISE
Solar power systems for household use are becoming increasingly popular as incentives from governments and electric utilities rise, and energy prices climb. Walter V. Nasdeo, managing director of Ardour Capital, says that as these technologies become more sophisticated, new products are emrging, such as roofing tiles that feature solar panels - innovations that help reduce the need for large, unsightly equipment. Homeowners typically link their solar power systems to the power grid and sell any surplus power to utilities, which are bound by federal law to purchase excess power, says Joseph E. Schwartz at Home Power magazine. Homeowners usually have to buy electricity when the panels do not produce sufficient power. Meanwhile, the federal government recently approved a tax credit of up to $2,000 for the purchase and installation of a residential solar power system. Source: The New York Times (09/11/05); Gray, Tim, Copyright 2005 INFORMATION, INC. Bethesda, MD (301)215-4688
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BUDGETING COSTS
The cost of living for a family could vary greatly within a single state or even a single metropolitan area, according to a new "Basic Family Budget" calculator developed by analyst Silvia Allegretto for the Washington-based Economic Policy Institute. The tool takes into account family size, housing costs, child-care costs and other basic expenses in more than 400 U.S. cities to determine the annual cost of living. For example, calculations show that a two-parent, one-child household would need $33,360 a year to live on Florida's Treasure Coast, but $37,212 per year to live in Naples, FL. Meanwhile, annual family budgets rise $2,000 when comparing Boulder, Colo., to Denver, with Boulder being the more expensive city. To check out the Basic Family Budget calculator, go to www.epi.org
Source: Scripps Howard News Service (09/01/05)Deibel, Mary, Copyright 2005 INFORMATION, INC. Bethesda, MD (301)215-4688
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STAGING YOUR HOME FOR SALE - IS IT WORTH THE INVESTMENT?
Recently the average selling price of a staged home was 19% above the listing price while the unstaged home was only 15%. The 4% difference more than paid the staging cost.
Here are the ten secrets fo selling from Marelen Wharmby, a successful home stager:
- Freshen up the home by painting walls a light, neutral color, such as antique white. Lighter colors appeal to a wider range of buyers and make each room look larger.
- Take a close look at the floor coverings in each room. If you have hardwood floors under the carpet, you will always make money by removing it, even if the floor is not in perfect condition.
- Allow as much light as possible to enter the room. Open up or remove all draperies, blinds, shades or other window coverings.
- Removing the clutter of everyday life - all utilitarian items, stacks of paperworks, toiletries, kitchen utensils, electronic equipment and television sets.
- Remove furniture from each room that does not go with the decor, such as items that stand out too much and items that are worn or of an unappealing color.
- Place the remaining room furnishings in a way that makes best use of the character of the space. A room should be balanced so that people do not focus on one particular piece of furniture.
- Now that you've removed the clutter from your home, adding some nice but inexpensive accessories will greatly elevate the perceived value of the home.
- Clean, clean, clean. Every crevasse within the home should be spotless and gleaming. Even your normal weekly cleaning can not come close to the quality of clean you need.
- You can't over spend on fresh plants and orchids, elaborate floral arrangements and landscape plants. All these provide a strong addition to the ambience you want to create.
- Go on vacation! The houses that sell for much higher prices are homes that do not have the slightly disheveled look which comes with showering in the morning and cooking dinner in the evening. Being gone also will lower your level of stress and make the house easier to sell. Think of it this way: Your vacation will actually make you money.
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