Highlands County Real Estate Update

Ten Tips to Make Your Small Room Look Larger

2008-01-30T21:05:00.001-08:00

When deciding to sell your home it is important to take the steps necessary to ensure that the rooms in your home are properly “staged” to appeal to prospective buyers. This may harder than expected as we all have rooms in our home that may be on the smaller side and hard to decorate. What can really be done with a small room?

Below is a list of ten tips to help you open up the small spaces in your home to appear larger and inviting to prospective buyers.

The use of light colors such as pastels, neutrals and white are a better alternative to “bright” or dark colors.

For your furniture, rugs, etc. you should select different shades and textures of the one color you select from above.

Lighting is critical when trying to create an illusion of a larger space. Recessed lighting is ideal for smaller spaces. In the event that this option is too costly, torchiere lighting is a viable alternative as the light bounces off the ceiling and back into the room.

Declutter the room.

A light colored floor and ceiling will open up the room and make it appear larger.

Mirrors are a must as they add dimension to the room by reflecting images, light and colors. Mirrors provide a “see through” feel to the room.

Remove large bulky furniture from the room. One or two smaller pieces placed closer to the walls are better than one large piece of furniture in the middle of the room.

Don’t clutter the walls with a collection of pictures. Replace the many pictures with one larger picture or painting.
Take advantage of the view of your yard and bring the outside in by allowing prospective buyers to see out into your flowerbeds or gardens.

Glass tables such as a dining table, end table or coffee table will maintain the “open” and airy feel in a small space.

What To Look For As a Buyer In Your Real Estate Market

2008-01-23T22:08:00.001-08:00

As we sit on the edge of our seats to see which way the real estate market will turn next, there are a number of people waiting for the market to hit bottom before they decide to buy.

How do you know when is the right time?

Blanche Evans, columninst for Realty Times has outlined a number of indicators to watch for if your are thinking about buying. Keep an eye on your local market and watch for these signs.

Inventories Start to Decline

The Days on Market Reduce

Mortgage Applications Increase

Sold Homes Go For Closer to List Price

Prices Remain Firm or Rise

Incentives Disappear

Some of these factors may already be happening in your area, so don't wait. If you were planning to buy and you were just waiting to see where the market would go, the time may be now. To read the full article, or watch the video, titled Realty Viewpoint: Six Signs It's Time For Home Buyers To Buy by Blance Evans click here.

Identity Theft - What You Should Know

2008-01-18T22:51:00.001-08:00

In a day and age when technology seems to rule a big part of our lives, it is important to make sure that our “identity” is protected. As we have all read the horror stories of the victims of identity theft, there are steps we can take to protect ourselves and our personal information.

For starters we should be clear about what identify is and how we are identified as individuals in this high tech world we live in. Identity theft occurs when our personal information is collected without our permission and utilized, most of the time, for criminal activity. What personal
information do these people target?

Your Name

2. Address

3. Birth Date

4. Social Security Number (SSN)

5. Credit Card Numbers

6. and Other Personal Identification Numbers

This is the type of information someone would need to open credit card or bank accounts, apply for cellular phone service, purchase vacations packages, forward your mail, etc. So how can you protect yourself from this information getting into the wrong hands?

If asked to provide personal information, ask why is it needed, how will it used, if it will be shared and with whom.

Carry the least amount of personal information with you as possible.

When asked for your credit number over the phone or internet, make sure that you know who you are dealing with and the communication line is secure.

It’s always a good idea to take extra security measures when dealing over the internet (i.e. digital signatures and data encryption).

Knowing your billing cycles can prove to be very useful should you not receive your bills in the mail. This could help in determining if you mail has been illicitly redirected.

Order your credit report at least once a year and review for any inaccuracies or any unusual activity.

Report lost or stolen credit cards immediately.

You can also request that your accounts require passwords before any inquiries or changes can be made

Choosing the right password is extremely important. You don’t want anything obvious and you DON’T want to write them down.

Always protect your pin number when using debit machines, bank machines or telephones.

Review your credit card cardholder agreement. A number of companies offer protection from credit card fraud.

Lastly, be aware of your garbage. Anything with the above mentioned personal information on it should not just be thrown out. Shredding this type of documentation (especially financial statements, receipts, etc.) is an effective step in preventing identity theft.

Taking the necessary steps above to protect your identity is not difficult. It’s as simple as being aware of what these identity thieves are looking for and arming yourself with the knowledge on how to properly protect your personal information.

Mortgage Tax Savings - Calculate Your Own Savings

2008-01-02T21:06:00.001-08:00

It's tax time again and we can use a little help in determining any tax savings. Did you know that interest paid on a mortgage is tax deductible if you itemize on your on tax return. So are points that are paid to lower your interest rate. Use my mortgage calculator to determine how much you could save in income taxes.

In addition to using the mortgage calculator you might want to familiarize yourself with some common tax related definitions.

Federal tax rate:: The marginal federal tax rate you expect to pay.

Interest rate: Annual interest rate for this mortgage.

Interest rate after taxes

Annual effective interest rate after taxes are taken into account. Please note that in addition to the $1,000,000 mortgage debt limit, this calculator assumes that your itemized deductions will exceed the standard deduction for your income tax filing status. If your itemized deductions don't exceed your standard deduction, the benefit of deducting the interest on your home will be reduced or eliminated. For 2002 the standard deductions were $7,850 for married couples filing jointly, $3,925 for married couples filing separately, $4,700 for singles, and $6,900 for heads of household. You should also be aware that the total tax savings may be less for higher incomes that have their allowable itemized deductions phased out.

Mortgage amount

Original or expected balance for your mortgage. Taxpayers can deduct the interest paid on first and second mortgages up to $1,000,000 in mortgage debt (the limit is $500,000 if married and filing separately). Any interest paid on first or second mortgages over this amount is not tax deductible. Home equity loans are limited to $100,000 or the amount of equity you have in your home. Our calculator limits your interest deduction to the interest payment that would be paid on a $1,000,000 mortgage.

State tax rate:

The marginal state tax rate you expect to pay.

Click here for more tax related definitions.

Merry Christmas & Happy New Year!

2007-12-23T21:42:00.000-08:00

WISHING YOU AND YOUR FAMILIES A
HAPPY AND HEALTHY HOLIDAY SEASON.

MERRY CHRISTMAS!

Highlands County Florida - A "Cool" Place to Live

2007-12-12T21:50:00.000-08:00

As Highlands County's "Coolest Realtor" I'd like to share with you why I love Highlands County and why it's the coolest place to live. Well, we have some of the communities --- Avon Park, Sebring, and Lake Placid, where the of people live. The lifestyle is fun, friendly, and causal. In Highlands County, a morning of golf makes for a perfect afternoon and getting dressed for "The Club" translates to socks optional!

We have an affordable cost of living and no state income tax. The median price of a home is $195,000, a lot less expensive than either of the Florida coasts or the urban areas. We are within a two-hour drive of either coast, two international airports, Mickey World, and the rest of the other major Florida attractions. We have luxury homes in beautiful golfing communities, to a cozy cabin on a pristine lake, or a quiet place in the country. For those of you who fly south in the winter, you can find a nice cool (or should I say warm) place to live for less than $81,000. Now that's what I call soooo...COOL!

If you have really cool hobbies and recreational needs, then you will find it all in Highlands County. Whether it's bass fishing on one of our 88 crystal clear lakes, or playing golf on one of a dozen or more championship golf courses, playing tennis, birdwatching, biking, canoeing, playing shuffle board (or as the cool people say shuffling), or antiquing you can find it all here in Highlands County!

Highlands County is a cool place to raise a family. We have a low crime rate, wholesome living, and good schools with dedicated teachers. Cool kids love Highlands County. We have really great sports programs from baseball, soccer, football to just about all cool organized sports. The Children's Museum of the Highlands is very cool for kids, moms, dads and grandparents. But most of all, our great outdoors is the coolest playground of all.

Just click on the Cool Favorite Links. I have put together some of my favorite cool web sites which have more information about the coolest of cool things to do in Highlands County!

Oops ..... I forgot to mention, Highlands County also has a really Cool County Administrator, my husband, Carl Cool.

Moving? - Top 10 Packing Tips

2007-12-05T22:03:00.001-08:00

When you decide to make a move to a new home there are a number of things to take care of including the dreaded packing. Not many people enjoy this process, but it can be a lot less stressful if you are organized and make a plan.

Here are a few tips to get you started.

Plan ahead and budget for the move. Will you be moving yourself or will you require the assistance of a moving company? If you are planning to use a moving company it’s a good idea to price this out ahead of time.

Make sure you have plenty of the following: strong packing boxes (more than you think you will need), markers and tags to label boxes, rolls of packing tape, bubble wrap for fragile items, packing paper, scissors and a knife for opening boxes.

Pack room-to-room keeping similar items together.

Use smaller boxes for heavier items so it is easier to lift.

You can use towels, linens and curtains to line the bottom and sides of boxes with fragile items. All fragile items should be individually wrapped. Clearly mark these boxes FRAGILE.

Make sure that any opened boxes or jars are tightly sealed before packing them.

Use colorful tags to identify the contents of the box and which room it will be taken to in your new home.

Pack any rugs last so that they will be the first thing unpacked and placed in the home.

Make a master list of all household items and personal belongings.

Finally pack a box with all the essentials and mark it “Open Me First”. This box may contain items such as: a few basic tools (flashlight, pocket knife, masking tape, light bulbs), bathroom essentials (toilet paper, soap, shampoo, toothbrushes & paste, hand towel), Kitchen items (paper towels, coffee maker & filter, paper plates, cups, utensils, pet food, trash bags).

Planning ahead will make all the difference to an overwhelming move. Do your research and make a pla

Selling Your Home During the Holiday Season

2007-11-28T21:43:00.001-08:00

Are you trying to sell your home during the holiday season or will you take it off the market until after the New Year?

Some people will argue that leaving it on the market over the holidays is a perfect way to weed out the “looky-loos” from the more serious buyers. Others think that leaving your home on the market during the holiday’s make you appear desperate to sell.

Discuss the pros and cons of both arguments with your Realtor® to decide what would be best for you and your home. In the event that you both feel it is in your best interest to leave your home on the market over the holidays, below are a few tips to consider when it comes to holiday decorating.

As most of us like to decorate our homes with lights, Christmas trees, and holiday scents during the Christmas season, this doesn’t always work well with properly staging your home for potential buyers. Keep the following in mind:

Curb appeal is still important. Try not to “over decorate” your front yard. A few lights on the house should be sufficient. You want your front yard to be inviting, not clutter

Interior decorations should be kept to minimum. You don’t want to take away from the many features of the home, by covering them up with decorations.

If you are use to having a beautiful large Christmas tree in your front window, you might want to consider scaling down the size of the tree or possibly getting rid of it all together and use festive table centerpieces in stead. A tree can take away from the real focus of the room and make the room appear smaller.

Wrapped present should not be left out. Keep them stored away so as not to add any additional clutter to the room.

Instead of having holiday scented candles and incense throughout your home before a showing, why not create some natural holiday scents with fresh baking and a simmering apple cider. The baking and the cider can be left out with napkins and cups as a treat for potential buyers viewing your home.

If you would like more information regarding selling your home during the holidays, please do not hesitate to contact me.

Fending Off Foreclosure

2007-11-23T21:34:00.001-08:00

It is no secret that foreclosures have increased drastically this year as a result of the subprime lending disaster and a lot of people are wondering if they will be next. For many homeowners there may be options, if they know what to look for and where to look.

In the event that you find yourself struggling to make your mortgage payments, and you fear foreclosure may be in your future, the National Foundation for Credit Counselling (NFCC) has suggested a few possible alternatives. These options to fend off foreclosure include:

Repayment Plan
Reinstatement
Forbearance
Loan Modification

The Federal Trade Commission wants people to know that these alternatives may not work for everyone especially if you are already three or four mortgage payments behind.

For more information regarding the above alternatives visit the NFCC's Homeowners Crisis Resource Centre website. They can also assist you in locating a certified housing counsellor to explore your options in an effort to fend off foreclosure.

Happy Thanksgiving Highlands County Florida

2007-11-19T21:46:00.000-08:00

WISHING YOU AND YOUR FAMILIES A SAFE

AND HAPPY THANKSGIVING.

We give thanks for unknown blessings already on their way. ~Author Unknown

Highlands Ridge, Florida - Adult Community Living At Its Best

2007-11-07T20:49:00.000-08:00

At Highlands Ridge, it's all about the lifestyle. Nestled beside a nature conservancy and 260 acre lake stocked with fish, Highlands Ridge is the Florida you've dreamed of.

Highlands Ridge residents come from across the country and around the world to experience the perfect combination of privacy and accessibility; city convenience and rural charm.

This wonderful 55+ community offers 36 holes of championship golf amongst the rolling hills and majestic oak trees and you've got Highlands County's most desirable destination. Highlands Ridge is the one active adult, age restricted community in the area where your custom dream home with a golf course view won't break the bank. The North Course expansion is well under way and highlights our reputation for quality and value. The famous South Course features the new Golf Villas for those seeking 100% maintenance-free living. Check out the HOMES page for information on all of our home sites and designs.

If you are looking for additional amenities consider the fitness center, pools, Founder's Hall, HH Resident Clubs, Library and Lake Bonnet. Highlands Ridge offers something for everyone.

Allow me to introduce you to this wonderful community as your representative to assist you through the buying process. Contact me today.

Highlands County Florida - A Place to Call Home

2007-10-31T21:57:00.000-07:00

You might be asking yourself, "why Highlands County" when Florida has so many great places to live? One reason is our communities are small towns and cities where people greet you and treat you like family. Avon Park is the city of charm with its mile long mall. Sebring, located on Lake Jackson is the city on the circle, and Lake Placid is the caladium capital of the world. All our communities are unique in their own special way. Our life style is fun, friendly and casual. In Highlands County a morning of golf makes for a perfect afternoon and getting ready for the "The Club" translates to socks optional!

Highlands County has an affordable cost of living and no state income tax. We are within a two-hour drive of either coast, major metropolitan areas, two international airports, Disney World and the rest of the other major Florida attractions. We have luxury homes in beautiful golfing communities, to a cozy cabin on a pristine lake, or a quiet place in the country.

Highlands County has a lot to offer. Whether it is bass fishing on one of our 88 crystal clear lakes, or playing golf on one of a dozen or more championship golf courses, playing tennis, birdwatching, biking, canoeing, playing shuffle board or antiquing in quaint shops, you can find it all here in Highlands County.

Highlands County is not only a great place to retire. It’s a great place to raise a family. We have a low crime rate, wholesome living, and good schools with dedicated teachers. Kids love Highlands County. We have really great sports programs through the YMCA from baseball, soccer, football to just about all organized sports. The Children’s Museum of the Highlands is very cool for kids, moms, dads, and grandparents. But, most of all our great outdoors is the best playground of all.

For more information about Sebring, Avon Park and Lake Placid communities visit Maureen Cool - Highlands County Coolest Realtor.

Home Inspections Part II - What Does The Home Inspector Look For?

2007-10-17T20:31:00.000-07:00

In this second installment of Home Inspections you will learn of the types of things your Home Inspector will look for when preparing your home inspection report. Your Home Inspector will perform a “visual” inspection to determine the condition of your home. To better understand what may be included in your report the Home Inspector will look at the following areas of your home.

Foundation and Framing

Roofing and Flashing

Gutters and Drainage

Siding

Decks and/or Porches

Driveways and Sidewalks

Doors and Windows

Stairs and Railings

Ceilings and Walls

Electrical

Plumbing

Heating and A/C

Ventilation

Attics

Basement

Garage

Don't forget to check out Home Inspections Part I to learn how to interview a potential Home Inspector.

Do Not Call Registry - You're Number May Expire Soon

2007-10-14T21:42:00.000-07:00

Most of us are, or have been, extremely frustrated at some point with unwanted calls made by telemarketers. One way to help prevent telemarketers from calling was the creation of the Do Not Call Registry back in 2003. Individuals can register their phone numbers with the registry in hopes to eliminate these unsolicited calls to our homes and businesses.

There were a staggering number of registrants within the first four days of the lists launch date and continued to grow to 149 million phone numbers currently.

The important thing to remember is there is a term to your registration. Your registration with the Do Not Call Registry is only good for five years at which time your phone number will be removed from the list unless you renew by your renewal date. As the five year anniversary of the list is coming up in the summer of 2008, you early registrants will have to think about renewing. You can check the status of your registration by visiting the DoNotCall.gov website.

Read the full MSN Money Central article titled Do Not Call list about to expire.

Top Six Items to Take With You to Your Mortgage Lender

2007-09-24T12:08:00.000-07:00

Applying for a mortgage can be a daunting task, but if you are prepared it will be less stressful and help your lender move things along smoothly. Below is a list of items that your lender will need in order to process your loan application. Having these things ready and with you during your meeting will not only save time, you will be more informed about your finances.

Employment information

Include current contact information for all your employers in the last 2 years

W-2s.

These forms should have been given to you from your employer.

Include W-2s the last two years filed

You may also want to make a list of any additional sources of income such as self-employment income, pension’s, rental income, child support or alimony or social security.

Pay stubs.

Include pay stubs received in the last 30 days.

Federal income tax returns.

Include tax returns filed in the last 2 years

Bank statements.

Bank statements for any/all your accounts for the last 2 months

Providing these statements will verify that amount of cash available for your down payment

In the event that a portion of your down payment is a gift, grant or assistance program, you may need to provide documentation to verify this as well

Current debts.

Make a list of any/all debts you have with company names, account numbers, balances and minimum monthly payments

Your lender may have already given you a list of items required and if not use this as a guideline. Most institutions will require similar documentation, but check with your lender first as they made need additional information from you.

Home Showing Tips - How to Make a Good First Impression

2007-09-09T21:17:00.000-07:00

You only have one chance to make a first impression with potential buyers so it is important that your home is in tip top shape and ready for showing.

Follow these few tips to help your agent.

1. Tidy Your Home

2. Unclutter cupboards and closets

3. Make any minor repairs

4. Cut lawn in the summer and shovel walks in the winter

5. Put away all valuables

6. Lock up pets or take them with you

7. Open all drapes and blinds

8. Make beds

9. Turn on all the lights

10. Leave the house

Helping your agent with these few things will help in creating a great first impression for each prospective buyer.

10 Tips To Sell Your Home Quickly in A Slow Market

2007-08-26T21:16:00.001-07:00

In a time when real estate has slowed down and the future of the market is uncertain, it is critical to be able to sell your home as quickly as possible, for the best possible price. Peter G. Miller, Columnist for Realty Times has outlined 10 negotiating steps to follow in order to increase your chances of a quick sale for the best price.

These steps include the following:

Step 1: Get a local broker.

Step 2: Read the sale agreement.

Step 3: Know the marketplace.

Step 4: Know your terms.

Step 5: Reduce deposit requirements

Step 6: Throw in stuff.

Step 7: Update MLS photos.

Step 8: Review the marketing plan.

Step 9: Visit open houses.

Step 10: Have context.

For more information and detailed descriptions of each step read Peter G. Miller's full article, 10 Steps To Sell More Quickly In Stalled Markets.

Highlands County - Back to School

2007-08-19T22:38:00.000-07:00

It's back to school time and kids and parents are busy trying to get organized to start the school year prepared. Kids are typically concerned with buying the right outfit while parents concentrate on making sure their kids have the proper supplies for their classes.

Check your local school website for a school supplies checklist. If your school doesn't offer this list online, below is a basic list, as provided by GreatSchools.com, to help you get started.

Elementary School

Glue sticks
Scissors
Ballpoint pens
No. 2 pencils
Colored pencils
Pencil sharpener
Large pink eraser
Box of crayons
Drawing paper
Construction paper
A ruler with English and metric measurements
School box
Kleenex
Small bottle of hand sanitizer
A backpack (Check out GreatSchools.com article, Tips for Buying a Backpack and Carrying Safely, about choosing the right backpack)

Middle-School and High-School

In addition to the basic school supply items, children in middle and high school may be required to purchase the following:

A calendar for time-management and for scheduling assignments
2 combination locks
Binder dividers
Several 3-ring binders
Folders to fit into binders
A small notebook to record assignments
Pencil case to fit into binder
Pens
Index cards, ruled and unruled
Calculator (Check with your teacher first for type and model)

Don’t forget to visit GreatSchools.com for a more complete list. Happy shopping and have a great school year.

Are You Killing Your Credit Score?

2007-08-07T22:30:00.001-07:00

When buying a home, an important factor in this process is your credit score. It is important to familiarize yourself with your credit report and the role you play in your final FICO score .

Your FICO score is one factor that lenders consider when they are trying to determine if they should lend you the money, charge you more, or flat out reject your request for financing.

Don't defeat yourself before you get started. CNNMoney.com put out an article, 6 ways to kill your credit score, that provides some useful information and insight into how we may be sabotaging our own credit.

Stay on top of your credit score and review your credit report regularly. This will limit the potential for errors that can also negatively affect your FICO score.

Moving With Children

2007-08-02T21:40:00.000-07:00

Moving can be extremely stressful especially if you have children. Don't forget that it can be just as challenging for your kids as it is for you.

They may be moving from the only home they have ever known and leaving close friends and their school behind.

It is important to be aware of the things that may be a concern to your children when making a move. These things could include the following:

Preschool children tend to worry about being left behind or separated from their parents.

Kids aged 6 to 12 can be concerned with how their daily routines will be affected.

Teenagers are concerned primarily with fitting in and having their social life disrupted.

Methods of easing some these concerns include:

Communicate with your child about what the new house will be like.

Take them on a visit of the new home and neighborhood (if possible)

If you can, visit the school with your child and meet some of the teachers.

Involving your children in the move can help make the transition easier. Your kids can be a great help to you and the move if you involve them such things as:

Packing some of their own special belongings, and decorate the box with stickers and markers.

Make plans together on how to decorate their new room.

Leaving friends behind may be one of the harder things your child has to do. Throw a going away party with their friends and take lots of pictures to make a nice scrapbook for them to look back on. Give them a stationary set or pre-stamped cards so they can stay in touch with friends, too.

There are dozens of things to consider and take care of during a move and by involving your children you just may relieve the stress your children are feeling, reduce your own stress and be able to focus more on other aspects of your move!

For more moving tips visit my Moving Strategies page.

Highlands County Florida - The Best of Both Worlds

2007-07-13T13:52:00.000-07:00

Located in the heart of Florida lies Highlands County. With communities such as Sebring, Avon Park and Lake Placid it is no wonder why we are called Sunshine State.

Whether you're visiting, currently living or even considering a move to our wonderful county you'll want to take advantage of all that Highlands County has to offer. Such as the crystal clear lakes for fishing, boating, skiing and sailing, and more than a dozen golf courses. Our gently rolling hills, orange groves and charming small towns make this a relaxing country getaway - and our central location provides easy access to Florida's best attractions. Highlands County offers you the best of both worlds - within two hours of most major attractions yet removed enough for that get-away-from-it-all feeling.

Come discover Highlands County for yourself!

Happy 4th of July!

2007-07-04T18:15:00.000-07:00

WISHING YOU AND YOUR FAMILY A HAPPY 4TH OF JULY!

I hope you have a happy and safe holiday with your friends and families and remember...

"Only our individual faith in freedom can keep us free”

Dwight David Eisenhower

Does Your Home Need Some Sprucing Up? Four Easy Home Improvements

2007-06-24T20:34:00.000-07:00

Many of us are aware that our homes need a little work done before we list it, but not everyone can afford a total remodel. Marshall Loeb of Marketwatch has listed four easy home improvements that won't break the bank.

Touch up your homes exterior

Replace your floors

Update your hardware

Transform your yard.

Read the full article at the Real Estate Journal.

Happy Father's Day!

2007-06-15T14:48:00.000-07:00

HAPPY FATHER'S DAY!

I don't care how poor a man is; if he has family, he's rich.

~M*A*S*H, Colonel Potter

Wishing you and your families and Happy Father's Day. If you are having trouble deciding what to get your dad for Father's Day, below are a few ideas that might help out and it doesn't necessarily have to be a "gift".

Spending time with the family

Afternoon at the park for a picnic and sports

A heartfelt email

Handmade and handwritten card

Print digital photos and create a "dad" poster

Have a fabulous Father's Day!

Buying a Home - How Much Can You Afford?

2007-06-06T12:16:00.000-07:00

Do you know how much you can afford? The first step in buying a home is to have a budget and figure out how much you can actually afford.

Your agent or lender can help you with this in a couple of ways:

Pre-qualifying process
This process will give you a general "estimate" of what you will be able to afford.

Pre-approval process
This process will allow your lender to review your finances in more detail in order to determine the amount of money they agree to loan you for your home purchase.

When your lender is reviewing your finances there are a few main things they will look at.

Gross monthly income
Credit history
Amount of outstanding debts
Source and amount of money available for down payment and closing costs
Interest rates, etc.

All these things put together will help your lender determine two important qualifying ratios.

Debt-to-Income Ratio
Generally the amount of debt you pay each month should not exceed 36 percent of your gross monthly income

Housing Expense Ratio
Most lenders will not approve your loan if the mortgage payment exceeds 28 to 33 percent of your gross monthly income

In addition to having your agent or lender pre-qualify you, there are numerous mortgage calculators out there that can give you an idea of what you are able to afford. Try out our Java Mortgage Calculator.

For more mortgage information visit How Much Can You Afford and feel free to contact me at any time should you have any questions or require additional information.

How to Organize Your Move or Relocation

2007-05-31T09:13:00.000-07:00

Moving can be a very daunting task and it is sometimes difficult to know exactly where to start and what needs to be done and when. This is why it is important to be prepared.

It is a good idea to begin with asking questions and doing research to determine the type of move. Will you be hiring a moving company or will you and your family do it yourselves? The article Know What To Ask Before Moving has some great information about what questions to ask and hidden costs to watch for.

Checklists are a wonderful method of listing the tasks that need to be completed that relate to your move or Relocation. The Checklist for Before and After You’ve Moved provides a great starting point. Once you have determined a course of action with your research and checklists, it is time to start packing. This Moving Techniques article provides some useful tips about packing and how to be prepared for your first night in your new home.

One of the challenges of moving is how your children may be affected. It's a great idea to get them involved and create an adventure for them. Helping Kids Move explains what kids might be concerned about when moving and how to make the transition as easily as possible.

Visit my Moving Strategies page for more information and tips to help you with your next move or relocation.

Are You Ready for Hurricane Season?

2007-05-25T13:16:00.000-07:00

As hurricane season approaches we all want to be prepared to protect our families and our homes. The multiple hurricanes that hit Florida in 2004 and 2005 triggered a need, in Florida residents, to prepare for these storms.

Unfortunately, as a result of a fairly uneventful 2006, it is feared that Floridians have once again become complacent and are not taking the necessary steps to prepare themselves for the possibility of an active hurricane season.

Now is the time to take these steps and prepare your home and your families by attending Highlands County Emergency Management hurricane preparedness seminar.

Tuesday, May 29th, 2007
Highlands County Agri-Civic Center

4509 George Blvd., just off U.S. 27

Doors open at 6:30 p.m.

You can read more about what will be discussed at the seminar in the article Mild 2006 hurricane season has some Floridians again unprepared.

Alternative Landscaping and Water Conservation

2007-05-16T11:52:00.000-07:00

We are currently living in a time where the environment is a growing concern. As homeowners we should all try to do our part and one of the things we can do is understand the importance of water conservation.

Home Owners Associations are trying to do their part for water conservation by creating beautiful, maintenance free landscapes called "xeriscape". This is a natural type of landscaping that reduces the amount of water consumption by following a few natural landscaping techniques.

Read more about how Home Owner Associations are exploring Xeriscaping in the article HOA Enviroscaping.

Home Security - High Tech Monitoring

2007-04-26T12:34:00.000-07:00

I think most homeowners have some knowledge of home security and monitoring, but have you considered the possibility of monitoring your own home?

Homeowners now have the ability to participate in the monitoring of their own homes using cellphones and computers. Through the use of homecams, and a Remote Monitor plan with your cell phone provider (if available) you can receive streaming video of your home right on your cell phone.

Read more about who offers these Remote Monitor plans and see if you fit in with other high-tech homeowners at High-Tech Ways to Keep Your House Secure.

Your Credit Score - Part 3 - The Key to Improving Your Credit

2007-04-20T10:23:00.000-07:00

A lot of people are faced with a lower FICO score than they would like and this could lead to problems when applying for credit or a mortgage. There are a few things that can be done to improve the score, but keep in mind there is no overnight fix. It takes time to re-build credit.

As mentioned in Part 2 of this credit score series it is important to check and review your credit report regularly. There could be inaccuracies in it that could be removed that may improve your overall score.
Pay your bills on time every month
Try to keep your credit card balances as low as possible
Limit the number of inquiries into your credit. Only apply for when absolutely necessary.

Take time to learn what is in your credit report before making any large purchases on credit. It can only benefit you in the long run.

Your Credit Score - Part 2

2007-04-12T13:29:00.000-07:00

Now that you have taken a few minutes to pull your credit report from Equifax, Transunion and Experian, I bet you are wondering how they actually determine your three digit FICO score.

The following breakdown summarizes how your score is calculated:

35% of your score is determined by your payment history.
Are you paying your bills and are your payments on time? How many times have you paid your bills late and how late were they? Have any of your bills been sent to collections?

30% of your score is based on the amount of outstanding debt you have.
The more debt you have the lower your score will be.

15% of your score is determined by the length of time of you have had the credit.

10% of your score is based on the number of times people have inquired about your credit

10% of your score is determined by the types of credit you have

The Importance of Your Credit Score

2007-04-09T21:18:00.000-07:00

When it comes to purchasing a home there are few people that can afford to buy it outright while the rest of us are forced to rely on banks and lending institutions for some sort of mortgage. There are a number of factors lender's consider when qualifying you for a mortgage and one of the more important factor's is your credit score.

Your credit score is a three digit number between 300 and 850 derived from a point or scoring system called FICO. Ultimately the higher your credit score the better your credit and the more likely you will qualify for your purchase. Your FICO score is based on your credit history such as how and when you pay your bills and the amount of available credit you currently have. This three digit FICO score tells lenders whether to lend you the money or not for your purchase.

Before applying for credit it is important that you are aware of what is in your credit report on the chance that there are any inaccuracies that might affect your score. You want your credit report to reflect the most recent credit activity available. There are currently three national credit bureaus that have their own scoring system based on the FICO system and you can pull your own credit report from any/all of the following:

All credit bureau websites have extensive information about how the scoring system works and how to read your report and identify any inaccuracies. If you are thinking of purchasing ahome or making a large purchase soon, take charge of your credit and review your report regularly.

Happy Easter

2007-04-08T10:22:00.000-07:00

Wishing you a happy and healthy Easter Holiday. Whether you are decorating Easter eggs, participating in an Easter egg hunt or attending Sunday Mass, enjoy your holiday and time spent with your family.

Happy Easter Everyone!

A "Growing" Concern for Homeowners

2007-04-04T13:00:00.000-07:00

As homeowners we should be aware of the existence and dangers of mold in our homes and how to address the issue before it gets out of control. A lot of times we are unaware that mold may be growing in the corners behind appliances after a water leak, or in the walls of our bathrooms without proper ventilation which is a “growing” concern if you are looking to sell your home.

As a homebuyer there are a few things to look for that may indicate the presence of mold in a home you are looking to buy. Read the following article to familiarize yourself with some of the more common signs.

The Buzz About Home Staging

2007-03-30T08:49:00.000-07:00

By now a lot of you have probably read or heard people talk about home staging and how this process can benefit you and the sale of your home.

Ideally you want a potential buyer to look at your home and be able to envision themselves living there. This can only be achieved by following a few important staging tips.

How do you draw potential buyers into your home? With impressive curb appeal. Whether we want to admit it or not, first impressions will often determine if a potential buyer wants to continue inside the house to take a look around. Your front yard should be inviting and clean. A good wash or fresh stain to the exterior of your home will present a fresh clean look. Your lawns, shrubs and trees should be trimmed and flower beds and pots weeded so as not to take away from the exterior view of your home.

Now that you have attracted a buyer into your home, first impressions don't stop there. A buyer will know within minutes of stepping foot into your home if they want to take a thorough look through the home. A few things to consider when staging the interior of your home include the following:

Keep your home clean and free of clutter

Limit the "personalization" in your home by removing any collections, knick-knacks and family photographs.

Eliminate any stong scents that may be in your home (i.e. pet odours, candle scents, cigarette smells, etc.) A fresh coat of paint could help freshen and clean-up a room.

Some rooms in your home may appear small to some buyers so you may want consider removing extra furniture in a room to give the illusion of more space. The same effect can be achieved by eliminating clutter from closets.

Don't miss out on a possible sale. Home staging is a growing trend that agents are using regularly with sellers to attract more buyers and sell your home faster.

Interest Rates In Our Current Buyers Market

2007-03-23T08:38:00.000-07:00

If you have been thinking about investing in Real Estate, now may be the time to revisit this possbility. There is a fair amount of inventory in the market right now at stable prices and better yet, interest rates have dropped below 6 percent in some areas. This criteria tells us we are definitely in a buyers market market.

What better time to contact your loan officer and research current mortgage rates. Read more about mortgage rates and what to look for in the following article.

What does this subprime fiasco mean for you and the value of your home?

2007-03-22T14:02:00.000-07:00

I'm sure by now, most of you have heard, or read, a little something about the downward spiral the subprime mortgage industry has taken recently, but have you considered how this may affect you and the value of your own home?

Many economists foresee a direct impact on consumers as a result of increased foreclosures of subprime mortgages. Read more about how this may affect you as a "seller" or a "buyer" in the following article.

2007-01-24T20:25:00.000-08:00

RISING CANDLE USE IN HOMES FUELS SAFETY CONCERNS

The growing popularity of scented and decorative candles as a chic and inexpensive design element is prompting fire safety concerns.

Safety and industry officials are weighing new labels and standards for candle accessories that would lay out warnings more clearly. And the nonprofit National Fire Protection Association has stepped up its campaign to warn homeowners and children about the potential dangers of candles.

"People look at candles and see how calming and pretty they are and sort of forget they are dealing with a potential fire hazard," says Barbara Miller, spokeswoman for the National Candle Association, an industry group in Washington.

Americans bought $746 million worth of candles and accessories in 2006, up 2.3% from the year before, according to market-research firm ACNielsen. The number, based on sales from mass retailers, doesn't include additional sales from specialty stores such as Yankee Candle Co., a national candle retailer based in South Deerfield, Mass.

The number of fires sparked by home candles fell from 2003 to 2004 after climbing steadily from 1990 to 2001, according to the National Fire Protection Association. The fires prompted a public-awareness campaign by fire officials and the industry. But the popularity of specialty candles and continued house fires has safety officials and the industry focusing on new prevention efforts.

The National Fire Protection Association, a nonprofit advocacy group based in Quincy, Mass., in 2005 dedicated a fire-prevention campaign to candle safety, running radio and print ads and giving fire departments lesson plans to use in classrooms.

ASTM International, a standard-creating organization for thousands of products and materials, is working on safety standards for candle accessories. Homeowners should always use a stable candle holder of fire-resistant material that is large enough to catch drippings, safety advocates say. Candle makers voluntarily use labels that warn people not to leave candles unattended, not to put them near combustible materials, and to keep them out of reach of children and pets.

Some homeowners learn that the hard way. In December, Windsor, Colo., homeowner Kelly Anderson accidentally started a fire when she lit a scented candle to get rid of the smell after cooking meat. When she put down some laundry, it caught fire. She and her family were unharmed but the blaze caused about $20,000 worth of damage and they had to spend four weeks over the holidays in a hotel.

-- January 19, 2007

By Sara Schaefer Munoz

From The Wall Street Journal Online

2007-01-22T12:54:00.000-08:00

CITIGROUP TO ACQUIRE ABM AMRO MORTGAGE GROUP

Merger with CitiMortgage would create third-largest

home loan originator

Citigroup Inc. says it will acquire ABN AMRO Mortgage Group, and move ABN's $224 billion mortgage servicing portfolio and 2,500 wholesale brokers to CitiMortgage Inc. in the process.

The combined companies will be the fourth-largest mortgage loan servicer and third-largest originator, Citigroup said in a press release today. Terms of the sale, which is expected to close this quarter, were not disclosed.

ABN AMRO Mortgage Group's primary originations business is via wholesale lending under the InterFirst brand. ABN AMRO Mortgage Group is a subsidiary of LaSalle Bank Corp. and ABN AMRO Bank N.V., and is headquartered in Ann Arbor, Mich.

Headquartered in St. Louis, Mo., CitiMortgage Inc. specializes in residential home lending through retail, wholesale and correspondent loan origination channels.

***

Monday, January 22, 2007

Inman News

2007-01-10T20:36:00.000-08:00

WARNING LABELS ORDERED FOR ALL PORTABLE GENERATORS

Federal regulators, stepping up oversight of an increasingly popular and potentially dangerous consumer product, ordered manufacturers to affix an explicit "danger" label to portable generators in an effort to stem an upsurge of deaths from carbon monoxide poisoning.

The new label, unanimously adopted as a mandatory rule by the Consumer Product Safety Commission, bears a stark message: "Danger. Using a generator indoors CAN KILL YOU IN MINUTES." It goes beyond the warnings attached to bags of charcoal, which also emit carbon monoxide, and products containing small parts, which pose choking hazards.

The agency is also considering other ways to reduce carbon monoxide exposure, such as capping emissions or requiring automatic shutoff devices. The CPSC already encourages consumers to have carbon-monoxide detectors in their homes.

The goal is to discourage consumers from using generators indoors or in partial enclosures, which frequently happens during storm-caused power outages. The CPSC says one gas-powered generator can release as much carbon monoxide as 1,000 cars. The agency has reports of at least 64 deaths related to indoor generator use in 2005, and 32 deaths over the last three months of 2006.

Deaths related to indoor generator use account for roughly half of deaths associated with carbon-monoxide poisoning each year, excluding cars. Other causes include using stoves or grills to heat homes when electrical power is knocked out.

-- January 08, 2007

By Christopher Conkey

The Wall Street Journal Online

2007-01-08T22:28:00.000-08:00

HUD AWARDS $31 MILLION FOR LEAD PAINT CLEANUP, EDUCATION

Detroit, Milwaukee, Austin and San Francisco get biggest grants

Local efforts in 12 states to eliminate lead-paint hazards in thousands of privately owned low-income housing units have been awarded more than $31 million in grants from the U.S. Department of Housing and Urban Development.

HUD's grants will help local projects in California, Illinois, Michigan, New Hampshire, New York, Rhode Island, Texas and Wisconsin reduce lead-based-paint hazards and improve living conditions. Eligible jurisdictions for the grant program include those with at least 3,500 occupied rental-housing units built before 1940.

Detroit and Kenosha County, Wis., landed the biggest grants ($4 million each), followed by Milwaukee ($3.9 million); Austin, Texas ($3.8 million); San Francisco ($3.3 million); Albany, N.Y. ($3 million); Woonsocket, R.I. ($2.8 million); Manchester, N.H. ($1.8 million); Lansing, Mich. ($1.4 million), Winnebago County, Ill. ($1.2 million); Buffalo, N.Y. ($1.1 million); and Schenectady, N.Y. ($1 million).

Detroit will produce approximately 200 lead-safe homes, conduct community education and outreach, and perform blood lead testing of young children, HUD said in a press release.

***

Monday, January 08, 2007

Inman News

2007-01-07T20:37:00.000-08:00

SHADY SWITCHEROOS AND SCAMS:

MORTGAGE TRICKERY TO AVOID

Brian Diez, a former military man, entered the mortgage business after a career as a stockbroker, in part figuring he would like the opportunity to help families buy their first homes. He learned quickly, however, that not all mortgage brokers have their clients' best interests at heart.

"What became clear to me is every company was really interested in selling as many loans as they can, and not really helping clients," says Mr. Diez, sales manager for First Class Equities in Oceanside, N.Y. His quest to inform consumers prompted him to create a blog on the topic, http://briandiez.blogspot.com.

The "dirty tricks" he has seen and heard of range from brokers steering clients into products clearly unsuitable for them to shady switcheroos at the closing table.

Consumers can protect themselves by doing some research online before talking to a mortage broker or banker, to have an idea of their mortgage options, Mr. Diez says. They should also request copies of and review their credit reports to know what their credit looks like before the discussion begins.

You may never find that altruistic mortgage lender: It's rare when commission-earning individuals -- whether selling mortgages, stocks or automobiles -- can completely divorce their self interests from a sale, says Joseph Badal, senior executive vice president at Santa Fe, N.M.-based Thornburg Mortgage.

But there are ways you can shop more wisely for a mortgage so you won't get fooled by salespeople who are more concerned about commissions than clients:

Beware of products that seem too good to be true. Watch out for low-payment advertisements, says Kate Crawford, chairwoman for the consumer protection committee of the National Association of Mortgage Brokers.

"What it is, it's a teaser ad...that could lead to negative amortization," she says. In a negative amortizing loan, borrowers aren't paying the full amount of interest accrued each month and the unpaid amount gets added to the principal, thus increasing the balance. Homeowners with this type of loan can find themselves owing more than they bought the house for -- something especially important to remember in a softening housing market.

Although certain exotic loans make sense for some borrowers, they're not for everyone, Mr. Badal says. To find the best rates and terms, compare estimates from a few lenders, he adds.

Ask about prepayment penalties. Mortgages with prepayment penalties are those which charge a borrower fees for paying off the entire mortgage or a large portion of the principal during a certain period of time. Penalties can also apply should the borrower choose to refinance.

Terms of the penalties can be found in the Truth in Lending statement given to borrowers. But if the loan has a penalty for prepayment, it may be best to keep shopping. "There are so many [loans] out there that don't have them," Mr. Diez says. "There's no need to put a client into a mortgage that has a prepayment penalty."

Don't cave to pressure, and protect your identity. If terms change at the closing table, don't sign the contract, Ms. Crawford says. "A borrower can walk away at any time. That's their right," she says. And never sign a contract stating an origination fee must be paid if the loan isn't closed, she adds.

She also recommends following common-sense measures: Don't ever sign a blank form, and get a copy of every paper that is signed. Don't give out a Social Security number before it's time to actually apply. For paperwork bank statements and paycheck stubs that a lender might require, make a copy and always keep the original.

And while at your lender's office, take a glance around to see how paperwork is handled -- it may be one indication of how careful a company is with sensitive information, Ms. Crawford says.

-- January 04, 2007

By Amy Hoak

From MarketWatch

2007-01-04T19:39:00.000-08:00

WEEKLY MORTGAGE RATES START YEAR MIXED

Various economic rates start year mixed

Mortgage rates posted mixed results this week on news of improvement in manufacturing and home sales and a disappointing employment report, according to surveys conducted by Freddie Mac and Bankrate.com.

In Freddie Mac's survey, the 30-year fixed-rate mortgage held steady at an average 6.18 percent, while the 15-year fixed-rate average inched up to 5.94 percent from last week's 5.93 percent. Points, which are fees charged by lenders for loan processing expressed as a percent of the loan, averaged 0.4 on the 30- and 15-year loans.

The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 6.02 percent this week, with an average 0.4 point, up from last week when it averaged 5.98 percent. The one-year Treasury-indexed ARM averaged 5.42 percent, with an average 0.6 point, down from last week when it averaged 5.47 percent.

"Interest rates were flat this past week, reflecting the mixed messages from recent economic indicators," said Frank Nothaft, Freddie Mac vice president and chief economist, in a statement. "The recently released manufacturing report showed an improvement, and while construction spending for November was down, it was still better than expected. On the other hand, a private sector employment report suggested that the labor market was weaker than anticipated. As a result, 30-year fixed-rate mortgage rates started off the year at about the same level as this time last year."

Nothaft said the market may get a "clearer signal" of where the economy is heading after the U.S. Department of Labor releases its jobs report on Friday.

In Bankrate.com's survey, mortgage rates moved slightly higher on a week highlighted by better-than-anticipated home sales figures. The average 30-year fixed-rate mortgage is now 6.24 percent, the highest since Nov. 15, with an average of 0.27 discount and origination points.

The average 15-year fixed-rate mortgage popular for refinancing increased to 5.99 percent, and the same was true for larger loans, with the average jumbo 30-year fixed rate up modestly to 6.47 percent, Bankrate.com reported. The average 5/1 ARM climbed to 6.15 percent and the average one-year ARM edged up to 5.94 percent.

Bankrate.com said movements in mortgage rates were subtle during the holiday season, with little in the way of economic data or market volatility to push rates one way or the other. The most significant news came in the form of better home sales figures for November, which pushed bond yields and mortgage rates higher on the belief that the Federal Reserve would be unlikely to cut interest rates any time soon.

The following is a sampling of Bankrate.com's average 30-year-mortgage interest rates this week in some U.S. metropolitan areas:

New York - 6.18 percent with 0.05 point

Los Angeles - 6.29 percent with 0.39 point

Chicago - 6.41 percent with 0.04 point

San Francisco - 6.22 percent with 0.41 point

Philadelphia - 6.19 percent with 0.3 point

Detroit - 6.29 percent with no points

Boston - 6.27 percent with 0.04 point

Houston - 6.25 percent with 0.48 point

Dallas - 6.2 percent with 0.43 point

Washington, D.C. - 6.09 percent with 0.53 point

***

Thursday, January 04, 2007

Inman News

2007-01-01T19:43:00.000-08:00

WILL HOUSING COSTS RISE OR FALL?

Perspective: Up, down, all around for real estate related costs, commissions, fees

Housing costs were a frequently discussed topic in 2006 as markets slowed from explosive highs and everyone from consumers to brokers to agents became acutely tuned to their own expenses. Here are some predictions from the Inman News team on what will happen to housing costs in 2007:

1. Home prices: Not up, not down -- flat is the operative word for home prices. 2006 was the year for adjustment, and adjust they did: they stopped rising as fast as the price of oil. Without easy money, without ridiculous hype and without speculators, 2007 will see further erosion of home prices.

2. Rents: Landlords are finally having their day, as home ownership loses some of its luster. Rental vacancies are tightening up and property owners can finally push up rents.

3. Real estate commissions: The Internet and a tight home listing inventory made for shrinking real estate commissions the last two years. Real estate agents were discounting each other to nab a scarce supply of listings. But that should end as listing inventory expands and the number of agents joining the industry shrinks. Plus, consumers will be willing to pay more to unload the houses that are sitting with very little traffic or action.

4. Mortgage rates: Interest rates have been up, down and all around. But when you smooth out the curves, they should stay about the same next year, say most experts. This alone will prevent a slowing housing market from becoming a bust.

5. Appraiser fees: The pressure is on as more and more online alternatives are created: Zillow, HomeGain and now Fidelity's CyberHomes.com, just to name a few. At some point, these automated home valuations will replace the cookie-cutter home appraiser. High-end and complex transactions will, of course, still require appraisers.

6. Title fees: Regulators have kept title insurance fees artificially high. With renewed sunshine on the title industry, title fees could finally feel the pressure and come down.

7. Open-house staging fees: Stagers will be in high demand, as homeowners must schlep more to sell their homes. Stagers will get more elaborate and so will their fees. More listings, more staging: supply and demand will kick in.

8. Construction supplies: Thanks to a slowing market, contractors' fees and their supply costs will finally come down as the home improvement industry slows and lenders tighten up on credit.

9. Number of Realtors: After 10 years of exploding numbers, the number of Realtors should stabilize with the slowing market and may even fall as the newbies find out that this market will have no mercy.

10. Publicly traded real estate firms: Don't bet your 401(k) on making a killing on publicly traded real estate. REITs (real estate investment trusts) are already pumped up, and the home builders are coming down to real estate reality.

Friday, December 29, 2006

By Inman News

***

2006-12-29T12:41:00.000-08:00

EXTRA POINTS

Paying mortgage points rarely pays off for borrowers: study

CHICAGO (MarketWatch) -- A new report claims that borrowers tend to purchase too many points when selecting a mortgage -- and in the process end up paying more than they would have with no points and a higher interest rate.
The study was co-authored by Abdullah Yavas, Elliott Professor of Business Administration at Penn State's Smeal College of Business, and Yan Chang of Freddie Mac. The two considered 3,785 individual mortgages originated from 1996 to 2003, looking at the points paid, interest rates and loan length.

Data showed that, on average, those who buy points are overestimating the amount of time they will hold their loans. They tended to pay off their mortgages about 37.5 months too early for the purchase of points to actually pay off -- defaulting, moving or refinancing before hitting a break-even point so the strategy made financial sense.

By purchasing points, borrowers lower the interest rate on the mortgage. One point is equal to 1% of the mortgage, charged as prepaid interest. Points that you pay to purchase your primary residence are deductible in the year you pay them on your federal income-tax return; points you pay to refinance must be written off over the life of your mortgage.

"We underestimate the possibility that we may refinance in the near future -- or refinance again in the near future -- and we underestimate the possibility that we may have to move, either for job relocation or other reasons," Yavas said.

Only 1.4% of borrowers who purchased points held their loans long enough to make it pay off; of those who didn't buy points, only 1.5% would have been better off purchasing them, according to the study.

It's significant to mention, however, that the data covers a time of decreasing interest rates and increasing property values, which led to a lot of refinancing activity, Yavas pointed out.

The report also found that borrowers who buy points often don't treat them as costs they can never recover and so are less likely to refinance. When they do refinance, they often do it late, perhaps hoping to compensate for the points paid. If a borrower "paid too many points and the interest rates come down quickly, refinancing right away would be the same as accepting the fact that you shouldn't have paid those points," Yavas said.

Yavas took an interest in the topic after he decided to refinance his own home a few years back and considered the trade-off between points and interest rates.

"Although I teach this stuff, it's not a trivial question," he said.

Dec 20, 2006

By Amy Hoak

Marketwatch

2006-12-22T20:55:00.000-08:00

YOUR MORTGAGE: PAY NOW, OR HOLD OFF TO INVEST?

Early next year my husband Gerry and I will reach two milestones in our finances: Our mortgage's outstanding balance will drop below $100,000 and, more significantly, more of our monthly payment will go toward principal than interest.

With the passing of both of these milestones, Gerry and I will be that much closer to paying off our 20-year fixed-rate mortgage, a process we're hastening by making additional principal payments of $195 a month. (Why the odd figure? I'll get to that later; the short story is that it is part of $395 a month in spare cash we debated over where to invest. ) Our goal is to have the loan paid off before our seven-year-old son Gerald enters college in 2017, leaving us with income available to meet any potential shortfall in our college savings.

Some people believe paying off a mortgage is a stupid move, and would advise us to forgo the mortgage prepayments and invest that $395 a month elsewhere. This school of thought holds that the wisest financial move you can make is to get mortgages with the lowest monthly payments possible -- refinancing as rates decline -- and never pay off the loans, a strategy that improves your cash-flow and lets you benefit from potential home-price appreciation.

Gerry and I don't agree -- we feel paying off our mortgage as soon as possible is essential to our goal of getting Gerald through college and then retiring. Let me walk you through our thought process. When we purchased Gerry's home from his dad in December 2000, we took out a 20-year mortgage for $122,000. Our timing was good: We nabbed a historically low fixed rate of 5%, with a monthly payment of $805 (not including property taxes and homeowners insurance). We'd been paying $1,200 a month for the mortgage on our first home, so we had a decision to make: What to do with the $395 a month in income the new, lower-rate mortgage freed up?

Our son Gerald was a year old at the time, so saving for college was on my mind. By investing the entire $395 sum in a tax-deferred college-savings account, such as a 529 college-savings plan, we'd be able to sock away $155,822 by the time Gerald graduates high school (assuming we invested in mutual funds with a conservative annual investment return of 6%). That's more than enough to cover the $134,916 this College Board calculator estimates a four-year public university will cost in 2017.

Gerry liked the idea of saving for college, but he was pondering another substantial expense: home remodeling. Our worn-down home was in need of some substantial renovations, starting with the kitchen and a bathroom. We'd planned on tapping a home-equity line of credit to fund these projects, and that $395 a month would help us pay off the debt more quickly. In 2004 our kitchen remodel cost $45,000, and we paid for it with our 10-year, $100,000 home-equity line of credit. At 4.5%, our monthly payments on the remodel were $466.37. As this Bankrate.com home-equity calculator shows, that additional $395 a month would have reduced our payments by five years, saving $5,786 in interest.

What about retirement? By saving that $395 a month in a tax-deferred IRA, we'd save an additional $169,542 for retirement, according to WSJ.com's 401(k) planning tool. Logic ruled that we'd get the biggest benefit from funneling the cash into a retirement-savings account, but Gerry and I decided against that because we'd done our retirement planning and felt we were on target with our savings goals. (Whether we rue that decision as we near retirement age remains to be seen.)

Finally, Gerry thought, why not just keep making our old monthly mortgage payment? By tacking an extra $395 principal payment onto our $805 monthly mortgage nut, we'd shave six years off our 20-year loan term and save $16,535 in interest. Once the mortgage is paid off, another $1,200 a month, or $14,400 a year, would be available to help pay Gerald's college costs.

The more we talked about it, the more Gerry wanted to prepay the mortgage. That six-figure mortgage payment has loomed large over my husband since the night before he closed on his first home in 1992. That night he lay awake, terrified by the $134,000 debt he was about to shoulder. A mortgage that size was mind-boggling -- up until that year he'd never borrowed from a lender in his life, and he hadn't even owned a credit card until his real-estate agent suggested he get one to start building a credit history.

What made him most upset was the way mortgages are structured, with the bulk of the monthly payment going to pay interest at the beginning of the loan term. Fast-forward eight years, when we refinanced our mortgage to buy the new home. That's when Gerry realized that of the $94,391 he'd paid out on his old mortgage over those years, just $12,035 had gone to paying down principal. His reaction? It was ugly.

Neither one of us liked the idea of our refinanced loan taking us back to the starting line in terms of paying principal and interest. Prepaying the loan would help get us closer to where our total principal payments were with the old mortgage.

Still, I knew if we put off thinking about college costs, years might slip away before we got serious about saving. And getting a head start on saving would mean we'd need to save less than if we waited a few years, thanks to the power of compounding interest.

In the end, we decided to split the difference: We'd take half of that $395 a month and save for college, and use the other half to prepay our mortgage. By paying an additional $195 a month (we chose the odd number because it took our $805 monthly mortgage payment to an easy-to-remember $1,000). By doing so we'll shave 47 payments off the term of our 20-year fixed-rate mortgage, saving $11,939 in interest. And in 2014, if things go as planned, Gerald and his high-school pals can join us at our mortgage-burning party.

Prepaying our mortgage works for us, and I see paying off your mortgage while you're still in the work force as a key to having a financially secure retirement: Should you get into a financial bind, you could either sell your home and downsize to a less-expensive one, or (if you qualify) take out a reverse mortgage that lets you tap your home's equity.

That said, there are a number of situations in which making prepayments isn't a good idea. Generally speaking, if you're planning on selling your home within five years, don't bother prepaying -- you won't save enough in interest costs to make it worthwhile.

If you're saddled with a lot of high-interest credit card debt and are prepaying your mortgage, you're paying off the wrong lender: Use all of your disposable cash to pay off the credit cards, then go shopping for a card with a better rate.

If you've been slacking on saving for retirement -- or haven't started saving at all -- forget about prepayments. Figure out how much you'll need to save for retirement here and then use your spare cash to get there by saving through a tax-advantaged retirement account, such as a 401(k) or Roth IRA. Ideally you should aim to save 10% of your gross annual income -- though my print colleague Jonathan Clements would argue that daunting figure is still too low.

Finally, if you're already in retirement and still paying off your mortgage -- with no end in sight -- don't even think about prepaying. Instead consider this radical idea: refinance to a 30-year fixed loan. You might be able to obtain a lower mortgage rate, which would boost your cash flow. And because you pay most of your interest upfront, you may pay less in taxes thanks to the mortgage-interest tax deduction.

-- December 15, 2006

By Terri Cullen From

The Wall Street Journal Online

2006-12-20T17:30:00.000-08:00

BACK ON THE STUMP: TREE TRUNK DECOR

American craft furniture, a mid-20th-century movement that favored organic forms and natural materials, became popular with artsy-crafty types in the '60s, '70s and '80s but never caught on with many fans of modernist design.

In recent years, however, prices for vintage pieces have been steadily climbing. At an auction yesterday at Sotheby's, a custom-made redwood dining table created in 1988 by George Nakashima, one of the fathers of the movement, is expected to fetch between $300,000 and $500,000, shattering previous sales records for works by the designer.

Now a new generation of manufacturers and furniture makers are marketing lines influenced by the American craft sensibility.

Hudson Furniture in New York recently began selling a line of dining tables cut from thick slabs of aged walnut that start at $10,500. Among the top sellers at eco-conscious retailer Viva Terra: a hand-carved stool made from a single piece of sustainable monkey-pod wood that the company added this year; the stool retails for $195. And furniture designer Chista, which primarily sells directly to decorators and architects, introduced a line of coffee tables earlier this year that are made from slices of reclaimed teak. The tables, which look like tree stumps and have a polished ebony finish, start at $7,500.

The mass market lines are also getting competition from a noted name in American craft: Mira Nakashima, daughter of the late furniture maker, recently introduced her own collection. The line of about 15 redwood chairs and tables, heavily influenced by her father's hand-carved, free-form style, starts at about $1,100 for some chairs, up to about $75,000 for large dining tables. (Ms. Nakashima is also creative director of the original Nakashima studio in New Hope, Pa., where sales of new pieces made from her father's original designs have risen steadily in the past few years.)

The revival of American craft comes as the industry looks to shake off continued flattening sales. Household furniture and bedding sales were nearly flat in the second half of 2006, according to an industry report from analyst Jerry Epperson. The report projects sales to grow just 1.6% in 2007.

Retailers and decorators say the designs appeal to homeowners who want to soften the look of rooms that feature sparse, minimalist décor. "One or two pieces can really warm up modernist interiors," says Manhattan interior designer Jasmine Lam.

David Hovey's glass and steel home outside Chicago is dotted with American craft-style furnishings, from desks to end tables. Mr. Hovey, a 62-year-old architect and developer, says the designs "add a natural element that other contemporary styles don't always offer."

Not everyone appreciates the style, however. Los Angeles decorator and textile designer Barclay Butera says the furniture's rough edges and awkward dimensions can turn off some homeowners. "Some people still see it as a hippie decor," he says.

-- December 18, 2006

By Troy McMullen

The Wall Street Journal Online

2006-12-18T20:46:00.000-08:00

TIPS ON HOW TO MAKE THE HOLIDAYS GREENER

Lots of people are looking for ways to make their holidays more meaningful by celebrating in a way that improves the environment -- or at least doesn't add to the piles of ripped-up wrapping paper, tossed-out cards and shriveled up pines that eventually end up on the curb. According to estimates from the California Integrated Waste Management Board, an extra million tons of waste are generated nationwide each week during the 10-week holiday season. But we're not all budding Martha Stewarts with the time, talent and energy to make our own green decorations.

Here are five ways to have a green Christmas that don't require skill with glitter or a glue gun:

Rethink how you wrap. Most commercial gift wrap makers don't use recycled paper. Worse, some types of gift wrap, like foils, can't be recycled after they're used. So how can you save some trees and still have a tempting present? Simply folding and reusing gift wrap is one option -- assuming your family doesn't just tear into their presents. But even the most carefully folded paper tends to look creased and crinkled after a few seasons. So try using gift bags, or wrapping the tops and bottoms of boxes separately so the recipient doesn't have to destroy the wrapping or bow to open it. Try using substitutes for store-bought wrapping paper, like old maps decorated with cast-off tape measures or colored string instead of ribbon or the funny pages (but only if your newspaper uses inks that don't rub off on your fingers). Vintage napkins and table runners from yard sales also work well, or a thrift-store shirt topped with an old bow tie.

Get out the shredder. Forget the Styrofoam peanuts; slivers of paper from your shredder make fine, fluffy packing material or filler for gift boxes. Shred pages from holiday catalogs or newspaper inserts -- or even old CDs, if your shredder can handle them -- to add a splash of color and shine.

Use live plants. The long-standing debate will probably never be resolved over whether fake trees or real ones -- recycled after the holidays into mulch -- are more ecologically correct. One way to circumvent the argument entirely is to buy a potted tree, and then plant it after the holidays. Nicole Hillis, a 27-year old government program analyst, uses a live potted tree each year that she and her apartment-mates adorn with homemade strings of popcorn and cranberries. "It sounds like we're hippies, but we're not," she says. "We're just looking for simple ways to reuse things." Another idea, suggested by Washington, D.C. environmental activist and online eco-store owner Reena Kazmann, is to make centerpieces out of a collection of small pots of plants like poinsettias or rosemary. When your guests leave, give each one of the pots as a gift.

Send recycled paper cards or e-cards. No one keeps track of how many of the two billion holiday cards sent each year are on recycled paper, says Barbara Miller, spokeswoman for the Greeting Card Association. But there seems to be a steady market for them: Chicago-based Recycled Paper Greetings has been selling them since 1971, while industry-leader Hallmark Cards Inc. has been seeing "consistent" sales of their recycled line, called Shoebox, for two decades. But since most cards aren't made from recycled stock and aren't recyclable, it makes sense to consider other alternatives. The easiest, at least for those family members who have email, is the e-card. Introduced about a decade ago, e-cards were first offered for free on greeting-card Web sites, and were wildly popular novelties. Soon, however, many companies started charging for them, and usage tapered off. About 20 paper cards are sent for each electronic card during the holidays, according to the Greeting Card Association, a ratio that's held steady for the past four years. Nevertheless, many Web sites, including Hallmark, still offer free e-cards, though the recipient will have to sit through an ad first. Some also let senders personalize cards with family photos or write messages of unlimited length.

Decorate with found objects. You don't need to be an artist to turn household items or collections into memorable decorations -- you just need a little imagination and some bits of ribbon. Seashells, your son's outgrown collection of tiny cars and trucks, and even kitchen cutlery can all be hung on a tree or worked into a wreath or garland. Eco-designer Danny Seo, author of Simply Green Giving (Harper Collins, 2006), is decorating his Christmas tree this year with his collection of antique teacups filled with candy and small toys. Using household objects decoratively is "cheaper and less aggravating" than fighting the crowds at the mall, he says. And because the results are quirky and unique, they also jump-start conversations at parties.

-- November 28, 2006

By June Fletcher

Wall Street Journal Online

2006-12-15T21:02:00.000-08:00

FORECAST: HOUSING DECLINE TO CONTINUE IN 2007

Median existing-home price expected to rise slightly

Existing-home sales are expected to reach the third-highest total on record this year, the National Association of Realtors announced today in its latest forecast.

Existing-home sales are projected at 6.47 million this year, a decline of 8.6 percent compared to 2005, and are expected to fall 1 percent to 6.4 million in 2007.

New-home sales for this year, meanwhile, are expected to fall 17.7 percent to 1.06 million, which is the fourth-highest total on record. The association also expects new-home sales to decline another 9.4 percent in 2007 to 957,000.

The association's chief economist expects total housing starts to drop 12.3 percent this year to 1.82 million units, with another 15.1 percent drop in 2007 to 1.54 million.

"Much of the contraction in the new housing market results from cuts in builder construction to support pricing for current inventories. In addition, high construction costs in many areas are minimizing potential profits," according to the Realtor group's announcement.

David Lereah, NAR's chief economist, said in a statement that there are mixed conditions for housing in different regions of the country. "Roughly three-quarters of the country will experience a sluggish expansion in 2007, while other areas should continue to contract for at least part of the year. Most of the correction in home prices is behind us, but general gains in value next year will be modest by historical standards," Lereah stated.

He also stated that there is a "window of opportunity" for buyers, as sellers are becoming more flexible and there has been "an unexpected drop in mortgage interest rates. These conditions will persist in many areas until early spring, when inventory supplies are likely to become more balanced."

Lereah predicts that existing-home sales will be 4.6 higher in fourth-quarter 2007 compared to the fourth quarter of this year.

The 30-year fixed-rate mortgage is forecast to gradually increase to 6.7 percent by fourth-quarter 2007. Last week, Freddie Mac reported that the 30-year fixed rate dropped to 6.11 percent.

The national median existing-home price for all of 2006 is projected to rise 1.4 percent to $222,600, with another 1 percent gain next year to $224,700. The median new-home price is expected to slide 0.5 percent to $239,700 this year, then rise 0.8 percent in 2007 to $241,700.

Lereah stated that prices are now "temporarily a little below a year ago when we were in a strong seller's market," Lereah said. "This correction is one of the factors drawing buyers into the current market, but most sellers are still seeing very healthy long-term gains."

The unemployment rate is expected to be 4.8 percent in 2007, up from the estimated average of 4.6 percent this year. Inflation, as measured by the Consumer Price Index, is forecast to be 3.4 percent for 2006 and 2.3 percent in 2007, while growth in the U.S. gross domestic product is expected to be 3.3 percent for all of this year and 2.3 percent in 2007. Inflation-adjusted disposable personal income is projected to grow 2.6 percent for 2006 and 3.5 percent next year, the Realtor group reported.

Monday, December 11, 2006

Inman News

2006-12-13T19:09:00.000-08:00

CONGRESS CREATES NEW TAX BREAK FOR MORTGAGE INSURANCE

Families with income of less than $100,000 can claim deduction

Households with annual income of $100,000 or less can get a tax break on their mortgage insurance when purchasing a home in 2007 using less than the traditional 20 percent down payment.

That's because a new tax deduction effective Jan. 1 will allow them to write off the full cost of their private or government mortgage insurance on their federal tax return.

With rising interest rates and slowing home-price appreciation, insured loans are often the best deal for borrowers, according to the Mortgage Insurance Companies of America, a trade association representing the private mortgage insurance industry.

Mortgage insurance helps loan originators and investors make funds available to home buyers for low-down-payment mortgages by protecting lenders from a portion of the financial risk of default.

"Making the cost of mortgage insurance tax deductible helps those who need it most: low- and moderate-income Americans, primarily first-time home buyers, who are financially responsible but simply don't have the means to amass a 20 percent down payment," said MICA president Steve Smith in a statement.

On average, the new deduction is expected to save those eligible to claim it an average of $300 to $350 a year, said MICA spokesman Jeff Lubar.

The deduction applies to private and government mortgage insurance programs, such as VA and FHA-backed loans, Lubar said. Legislation creating the deduction was supported by consumer, business, taxpayer and civil rights groups, including the National Urban League, the National Taxpayers Union, the American Homeowners Grassroots Alliance, and the Cuban American National Council.

Manny Mirabal, president of the National Puerto Rican Coalition, said about one in three families benefiting from the deduction will be minorities.

Mirabel said that with the rate of Hispanic home ownership lagging 20 percent below the national average of 68 percent, "this legislation (will) enable more hardworking Hispanic families and consumers to become homeowners."

Monday, December 11, 2006

***

Inman News

2006-12-11T19:47:00.000-08:00

O CHRISTMAS TREE, HOW COSTLY ARE YOUR BRANCHES

It's getting a little more expensive to put on a holiday light show in the front yard.

The high price of copper is driving up the cost of some lights by as much as 25%. Rising energy costs means it takes more dollars to keep those lights switched on. Higher fuel prices are also making it more costly to ship items, especially large decorations such as those popular life-size blinking Santas. Artificial Christmas trees and tree stands are more costly, too, as the costs of plastic and steel have risen. The higher costs are leading some retailers to cut corners: Some, for example, are skimping on the number of branches they include in their fake trees.

Big-box retailers -- such as Home Depot Inc. and Wal-Mart Stores Inc. -- have managed to keep prices down. Their high-volume orders can garner discounts, and those retailers also ordered early enough to avoid midyear copper-price increases. But independent retailers and decorating services have been hit hard.

The Christmas Light People, a lighting-design firm based in Tewksbury, Mass., that serves the Northeast, recently increased light prices by 20%-25%, adding close to $100 on a typical job. Holiday Lighting Specialists, a maker of Christmas displays in Tonkawa, Okla., that ships around the country, has seen material costs rise three times since January, forcing the company to raise prices on lights and displays by about 10%. TWI Inc., Wichita, Kan., which runs the lighting-design business LightWorks and the national online retailer LightTheNight.com, has also bumped up prices some 10% on imported products. Bennie Alegria, a holiday decorator in the Orlando, Fla., area whose average job runs about $3,000, says he's seen a 10% increase in shipping costs alone on big light displays, such as a popular life-size Santa in a golf cart. He has passed the increase on to clients this year.

All this comes as electricity rates are rising across the country. A 15% increase went into effect in Baltimore this summer, for example. Utah residents will see a 7.6% increase next week.

The expense of decorating is hitting yards around the country. Each year Tony Blore, a homeowner in Bellingham, Wash., adds another large figure to his home's holiday light show. The show already involves 35,000 lights and garners letters of appreciation from neighborhood families. This year, he eyed an animated Santa climbing a ladder and a nearly four-foot diameter blinking ball by LightTheNight.com. But he opted for only the Santa, which cost around $430.

"The prices are just getting quite expensive," he says. "Maybe next year I'll be able to buy more."

While consumers could just head to the big-box stores to avoid the higher prices, some homeowners say they prefer the work of smaller shops and decorators because of their personal service and because they stock more specialty items. Smaller outlets, for example, may offer commercial-grade light strands -- with thicker wire and more connections -- as well as more durable displays not found elsewhere.

Holiday retailers are the latest companies to feel the impact of high material costs. Soaring metal prices in recent years have affected everything from the cookware to the auto-parts industries. High copper prices -- up nearly 50% in the past year -- have even encouraged thieves to steal air conditioning units and pipes to sell at scrap yards. Indeed, some in the holiday decorating industry say they may try to recoup some of their costs by selling lights to scrap dealers after the holidays and then replacing them next year, rather than going through the effort -- and cost -- of organizing and storing them.

Higher prices of steel in recent years are even causing an uptick in the price of some Christmas tree stands. The Web site of Grinnen's Last Stand, made by a couple in Pennsylvania, reads "Sorry to do this. The cost of the stand has gone up to $40 because of very high steel cost." Two years ago, the stand sold for $35, says creator Jim Grinnen.

The prices of plastics used to make the needles and trunks of artificial trees have also gone up. They jumped last year after hurricanes in the Gulf of Mexico disrupted supply, and have remained higher than in recent years due to the cost of oil needed for their production. Prices of polyvinyl chloride, or PVC, often used in tree trunks, were about 10 cents a pound higher in July than two years prior, according Chemical Data LP, a consulting firm in Houston, Texas. Prices of polyethylene, another plastic that is often used for fake needles, were up 21 cents a pound in July compared with two years ago, the company said.

As a result, some retailers have nudged up prices. Prices of Frontgate artificial trees -- which run from $150 to $1,300 in the catalogue -- are up about 5% since last year. And tree retailer Balsam Hill's products can run as high as $2,300 (for a 12-foot faux Vermont White Spruce with 3,600 lights). Balsam Hill Chief Executive Thomas Harman says light costs contribute to the tree's price, and now constitute as much as 25% of the tree's cost, compared with a high of 15% on trees made earlier in the year.

To keep tree prices down, some retailers are shaving off lights and branches. Web site ChristmasLightsEtc.com this year stocked more affordable options, such as the new Douglas -- a 6.5 foot tall tree with 1,048 branches, or "tips," and 500 lights. It sells for $204. A higher-end tree, the 6.5 feet tall Winchester has 800 lights, 1,435 tips, and retails for $285. Michael Streb, the company's director of sales and marketing, said he wouldn't sell anything with much fewer lights or branches because consumers may end up seeing bare spots.

"You have to hit a price point, but you don't want returns," he said.

Also for the first time this year, the site has implemented a "good, better, best" pricing strategy for lights so consumers can buy more basic products if they are more concerned about price than commercial quality. For example, strands of 50 clear mini lights can go for $3.95, $6 and $7 depending on wire thickness, spacing and how tightly bulbs are fastened. He says the site also tries to keep more in stock, as a way to compete with mass merchandisers who might be more likely to sell out.

But despite any cost increases, many customers still want a professional to dress up their home. Peter Latsey, a real-estate investor outside Boston, spent around $2,000 to have the Christmas Light People put lights on some trees and the roofline of his 5,000 square-foot contemporary colonial home. He didn't mind that the rising cost of lights contributed at least an additional $100 to the job.

"You might mistake this home for an airport," says the 52-year-old father of two. "It's me getting caught up in Christmas."

-- December 08, 2006

By Sara Schaefer Munoz

From The Wall Street Journal Online

2006-12-08T11:52:00.000-08:00

RATE OF HOME-PRICE INCREASES FALLS TO SLOWEST PACE IN EIGHT YEARS

U.S. home prices grew at an annual rate of 3.5% in the third quarter, the slowest rate of price appreciation seen in eight years, the Office of Federal Housing Enterprise Oversight reported Thursday.

Including the third quarter, home prices are up 7.7% in the past year, the slowest in three years. A year ago, prices were rising at a 13.4% pace.

By comparison, home prices rose at an annual rate of 5.1% during the second quarter, with the year-over-year increase through June pegged at 10.3%.

Prices had risen by 57% in the previous five years.

"The slowdown is not unexpected," said James Lockhart, director of OFHEO, in a release. "There are still some areas where appreciation rates remain very high, but now they are the exception rather than the norm." Read the full government report.

Still, home prices were still growing much faster than inflation, which fell at an annual rate of 0.2% during the third quarter.

"It is nice to see ... that there are plenty of pockets of strength out there to offset the places where prices are cooling/falling, since it's only the negative areas that get the media attention," wrote Stephen Stanley, chief economist for RBS Greenwich Capital, in an email.

The OFHEO index is considered the best gauge of home values, because it doesn't depend on the mix of houses sold as do reports on the median prices for new and existing homes. It compares apples with apples by tracking mortgages written for the same houses over time.

A separate index based only on home sales rather than also including mortgages for refinancing showed home prices rose 6% in the past year.

Prices fell 0.6% in Michigan over the past year, the first annual decline in any state in more than six years.

And prices fell from the second quarter to the third quarter in five states: New York, Rhode Island, Michigan, New Hampshire and Massachusetts.

Idaho showed the fastest year-over-year growth at 17.5%. Prices were also growing at rates of more than 15% in Utah, Oregon, Arizona, Washington and Florida.

The Rocky Mountain region was the hottest regional market in the third quarter, with prices rising at a 6.8% annual rate. Prices rose just 0.3% annualized in New England.

Prices fell on a quarter-to-quarter basis in 15 cities in California, including San Francisco, San Diego, Oakland and Sacramento. For the state as a whole, price gains slowed from 10.2% in the past year to annualized growth of about 2.5% in the third quarter.

Ten cities recorded price gains of more than 20% in the past year. Up more than 30%, Bend, Ore., showed the largest price gains, with Boise, Idaho; Gulfport, Miss.; Miami, Fla.; and Wenatchee, Wash., rounding out the top five.

The biggest year-over-year declines were seen in Anderson, Ind.; Ann Arbor, Mich.; Springfield, Ohio; Holland, Mich.; and Greeley, Colo. In all, 18 cities recorded price declines over the past year.

In just the third quarter, 67 of 275 cities suffered falling prices.

Among the top 15 cities in population, three saw prices falling in the third quarter: Detroit, Boston and San Francisco. Among large cities, the largest price gains in the quarter were seen in Miami and Seattle, each up about 15.5% annualized.

-- December 04, 2006

By Rex Nutting

From MarketWatch

2006-12-06T20:47:00.000-08:00

SCAMMERS TARGET HOMEOWNERS AS FORECLOSURES INCREASE

As the number of foreclosures rises, homeowners unable to make their mortgage payments are facing another growing threat: "foreclosure rescue" scams.

State and federal authorities say they are investigating an increasing number of homeowner complaints about fraud and deception by companies that engage in lending to financially distressed borrowers seeking to avoid foreclosure. Several states have recently passed or are contemplating new laws to provide more protection against dishonest businesses trying to take advantage of already vulnerable homeowners.

The problem centers on foreclosure-rescue companies, which target homeowners behind on their mortgage payments through newspaper ads or fliers claiming services such as "fast cash," "equity funding" and "no credit check." According to some recent cases filed by consumers and regulators, the companies mislead borrowers into believing they can save their homes from foreclosure in exchange for a transfer of the title for a year or two. The companies promise borrowers they can stay in their homes by paying rent for that period, giving them time to catch up financially until they can buy back their property. Often unknown to the borrowers, however, the companies may have sold their homes to a third party, stripping out the home equity and leaving the borrowers on the verge of eviction.

"More and more, we're seeing some real sharks, pretending to be the homeowner's best friend, but what they are after is the equity in the house," says Arizona Attorney General Terry Goddard.

Foreclosure fraud has existed for a long time. But in recent years, experts and law-enforcement officials say, the schemes have grown increasingly complex, with scam artists often eyeing the chunks of equity that homeowners across the country amassed during the rapid housing-price appreciation from 2000 to 2005.

The scams are getting a boost as the housing boom fades and the numbers of past-due mortgage loans and foreclosures climb. Foreclosures historically have hit mainly homeowners with weak credit ratings. But now, a wider range of borrowers are struggling to pay off high-priced loans that lenders churned out during the boom. Online foreclosure-data service RealtyTrac says more than one million borrowers have seen their properties put in foreclosure so far this year, up 27% from the same period last year.

Statistics on the exact number of foreclosure-fraud cases filed are hard to come by as they are usually lumped together with mortgage fraud, which includes fraud against both lenders and borrowers. The Federal Bureau of Investigation estimates that mortgage fraud led to over $1 billion in losses in 2005, up from $429 million a year earlier. "We're increasing our focus on mortgage fraud," says Bill Stern, a supervisory special agent and mortgage-fraud coordinator at the FBI.

Alejandro and Martha Balderas tried for months to refinance their Chicago home and take it out of foreclosure after medical bills kept the couple from keeping up with their mortgage payments. They thought they had found their white knight when Platinum Investment Group LLC, a mortgage and real-estate investment company, promised the couple a loan against their house so they could pay off their mortgage and stay in their home, according to a complaint filed against Platinum in Circuit Court of Cook County, Illinois, by the state attorney general's office.

The Balderases, in their early 40s, signed on in April 2005 -- only to find out soon afterward that they had signed over their home to Platinum, which then sold it. Unable to keep paying "rent" to the company, they are now threatened with eviction, Ms. Balderas says. "It's a nightmare and we're reliving it every day," she says.

The Illinois attorney general charged that Platinum duped homeowners into transactions that caused them to lose substantial equity in their homes and face eviction. Platinum has denied the allegations. A lawyer representing Platinum didn't respond to requests for comment.

A total of 10 states have legislation in place to deter foreclosure-rescue fraud, including California, Georgia, Missouri, Minnesota, Maryland, Colorado, Rhode Island, New York, Ohio and Illinois, according to Creola Johnson, an associate law professor at Ohio State University.

A common feature among those laws is that they give homeowners the right to cancel the "rescue" transaction days before the closing. In addition, for instance, under the legislation passed in Illinois this year, if a company acquires any financial interest in a property in foreclosure and simultaneously leases the property back to the homeowner and gives the owner the option to buy it back at a later date, the acquirer, in certain cases, must pay the homeowner at least 82% of the property's fair-market value at the closing of the purchase.

The goal of the payout requirements under the Illinois law, which goes into effect Jan. 1, is to ensure that distressed homeowners receive a substantial and fair amount of home equity when entering into leaseback transactions, while giving legitimate foreclosure purchasers a reasonable chance to profit.

Another common type of consumer complaint involves so-called foreclosure consultants, who, for an upfront fee, promise borrowers to negotiate with their lenders to postpone or avoid foreclosures. Illinois and several other states forbid foreclosure consultants from charging an upfront fee before performing the agreed-upon services.

Still, homeowners who find themselves duped into foreclosure scams often have a hard time recovering their losses, consumer lawyers say. For example, state law may not protect consumers if their houses are sold to third parties who claim they were unaware of any alleged fraud, according to a National Consumer Law Center report on foreclosure fraud.

-- November 29, 2006

By Lingling Wei

From The Wall Street Journal Online

2006-12-04T16:37:00.000-08:00

PENDING REAL ESTATE SALES INDEX DROPS IN OCTOBER

Housing market 'appears to be stabilizing,' says NAR economist

A National Association of Realtors gauge of pending-home sales dropped 1.7 percent in October compared to September and fell 13.2 percent compared to October 2005, the association announced today.

The Pending Home Sales Index, based on contracts signed in October, had a reading of 107.2. An index of 100 is equal to the average level of contract activity during 2001, the first year to be examined and the first of five consecutive record years for existing-home sales.

In preparing the index, the Realtor group examines a large national sample -- typically representing about 20 percent of transactions for existing-home sales. A sale is listed as pending when the contract has been signed and the transaction has not closed, but the sale usually is finalized within one or two months of signing.

The index had reached a cyclical low of 105.6 in July, and the decline from year-ago levels is narrowing, the association reported.

David Lereah, NAR's chief economist, said in a statement that a fairly steady pace of home sales can be expected for the next two months. "It's important to focus on where the housing market is now -- it appears to be stabilizing, and comparisons with an unsustainable boom mask the fact that home sales remain historically high -- they'll stay that way through 2007," he stated. "In addition, a temporary correction in prices distracts from the fact that it is primarily the number of home sales that affects the economy, and the number for this year will be the third highest on record."

Regionally, the index dropped 0.6 percent in the Midwest in October to 95.8 and was 15.4 percent below a year ago. The index in the South declined 1.7 percent to 122.9 and was 9.3 percent below October 2005. In the Northeast, the index eased 2.1 percent in October to 88 and was 13.5 percent lower than a year earlier. The index in the West fell 2.7 percent to 109.5 and was 17.4 percent below October 2005.

Monday, December 04, 2006

***

By Inman News

2006-12-01T08:58:00.000-08:00

FUTURE HOME BUYERS DETERMINE REAL ESTATE TRENDS

Study: More buyers to be young minorities

The most significant factors impacting housing over the coming years are whether aging baby boomers decide to grow old where they are and where young immigrants decide to settle, according to a new study released today by the Mortgage Bankers Association.

The study, "America's Regional Demographics in the '00s Decade: The Role of Seniors, Boomers and New Minorities," conducted by William H. Frey of the Brookings Institution and sponsored by the MBA's Research Institute for Housing America (RIHA), analyzes two components driving the changes that will transform the U.S. population over the next several decades -- aging boomers, and immigration of Hispanics and Asians.

It finds that the overall U.S. population will experience a rapid aging as boomers grow older, while absorbing large numbers of young recent immigrants. Different regions of the country will have different demands for housing driven by the relative impacts of aging in place versus migration within the country and immigration from abroad. For example, suburban areas will gray faster than urban areas due to the boomers aging in place.

"It has been said that demographics are the future that has already happened and demographic changes are one of the most powerful forces impacting the residential and commercial real estate and real estate finance markets," said Doug Duncan, MBA's chief economist and senior vice president of research and business development. "We expect that this study will help our members develop business plans to meet the ever changing American marketplace."

Key findings from the study include:

Regional Differences in Aging Patterns

Senior populations can increase through in-migration or through aging in place. However, aging in place is the dominant force that will shape demographic changes in the years ahead.
Even in Arizona, which shows the highest rates of net in-migration, the migration effect is dwarfed by the effect of the existing population simply getting older and not moving.
The most dramatic impact of aging in place will be in parts of the country that are not now associated with aging populations, like Nevada, Colorado and Georgia. These states that will exhibit the fastest senior growth are not necessarily the ones that have the highest percentage of seniors. States with high senior shares have typically experienced one or more decades of sustained declines in their younger populations. This leaves behind seniors who are far less likely to move than people in their 20s and 30s.
Suburbs will be the fastest graying part of our national landscape. In projections of Philadelphia and Chicago, for example, suburbs will begin to age faster than cities, even though both cities start out having older populations than their suburbs.
While close to 30 percent of young households move each year to a new residence, that percentage slides down to the 4-5 percent range for people in older age groups. Therefore, household mobility, which has been a major driver of home sales, will fall off as boomers age.
Less than 2 percent of residents aged 55–64 move across state lines in any one year, and the percentage is even less for those over 65. The aggregate number of interstate moves among those aged 55 and over is dwarfed by the number of moves undertaken by the younger population, meaning fewer moves as a larger portion of the population is over 55.
Well-off young senior populations will emerge in areas like Las Vegas, Denver, Dallas and Atlanta.

Greater Dispersion of Minorities

While it is popular to think of the United States as a melting pot, Hispanic, Asian and other minority groups are disproportionately clustered in selected areas.
What has changed is the "hold" that the traditional immigrant gateways have on the Hispanic population. In 1990, the top 10 metropolitan areas were home to fully 55 percent of all U.S. Hispanics, and the top two, Los Angeles and New York, housed nearly three in 10 Hispanics nationwide. In 2005, however, less than half of all Hispanics live in the top 10 areas, and Los Angeles and New York are home to only 22 percent. When one examines the far reaches of Hispanic dispersion nearly one third of all counties in the United States have at least 5 percent of their populations that are Hispanic, compared with one out of 6 in 1990.
The vast majority of Hispanics and Asians speak English at home, and those who do not can communicate in English very well.
These new minorities are also relatively young compared with the rest of the population, suggesting that racial generation gaps are emerging in areas where they live in large numbers. That is, young adults up to age 40 in these areas show a strong representation of new Hispanic and Asian households, whereas the "over 40" crowd is still dominated heavily by white and black baby boomers.
Minorities tend to be younger and as such are highly mobile. Four out of 10 young Hispanics or blacks changed residence over the 2004-05 period. Nearly one out of 10 Hispanics, and more than one out of seven Asian movers, came directly from abroad.
Overall, 15 of the nation's 88 large metropolitan areas have majority minority populations.

New Regions Defined by Demographic Changes

"New Minority States" where Asians and Hispanics currently account for about one-third of the population: New York, New Jersey, Florida, Illinois, Texas, New Mexico, Arizona, Nevada and California.
"Faster Growing States" contain many suburban communities and attract migration from the rest of the country as well as from recent immigrants. This group of states will have the highest rate of growth for the 55-and-over population: New Hampshire, Maryland, Virginia, North Carolina, South Carolina, Georgia, Tennessee, Colorado, Utah, Idaho, Oregon and Washington.
"White-Black Slower Growing States" and "Mostly White Slower Growing States" will have the lowest rate of overall population growth, but will gray rapidly through aging in place, and will have the highest shares of seniors: Ohio, Michigan, Alabama, Mississippi, Louisiana, Arkansas, Missouri, Washington, D.C., Maine, Vermont, Massachusetts, Connecticut, Rhode Island, Pennsylvania, West Virginia, Kentucky, Indiana, Minnesota, Wisconsin, Iowa, North Dakota, South Dakota, Nebraska, Oklahoma, Kansas, Wyoming and Montana.

***

Monday, November 27, 2006

By Inman News

2006-11-29T20:48:00.000-08:00

NEAT FREAK THROWS IN THE TOWEL,

TRIES TO HIRE HOUSECLEANERS

I fired the housekeepers.

For years I've complained about the difficulty of keeping up with house cleaning, weary of trying to find time for dusting shelves and scrubbing toilets amid long work commutes and a whirlwind of weekend activities. My mom would call on weekends to chat and find me in the middle of rushing from one household chore to the next. "You need to hire a cleaning service!" she'd say in that worried/exasperated tone she saves just for me.

For a long time I laughed it off: Where I grew up people didn't hire maids, they were the maids. (In fact, my first job at age eight was dusting the home of an elderly neighbor once a week for $5 a pop.) My husband comes from a similar background and felt hiring a maid might seem a little pretentious -- after all, no one in our neighborhood seems to employ one.

Some of my friends now use house cleaners, but I still felt uncomfortable with the idea of having a stranger clean my house. There's something revealing in the mess a family makes of its home. What, for example, does the Superfund site that is my home office say about my work habits? Our dog Butch can't eat a bowl of food without first upending its contents all over the kitchen floor -- what does that say about how we trained him?

Home office aside, I'm a bit of a neat freak, so I wondered whether a cleaning service would do as thorough a job as I would. Or whether they'd do it better. And in an odd way I felt paying someone to clean my home was surrendering to defeat in my effort to successfully juggle family and a full-time job -- outsourcing housecleaning would be admitting that I really can't do it all.

I don't do all the cleaning myself: My husband Gerry is also a neat freak and does his fair share around the house: doing the laundry, unloading the dishwasher, taking out the garbage. (His obsession with vacuuming the rugs even worries me a bit.) Our son Gerald also helps out, making his own bed and putting his toys away. Still, I feel like our house is always in need of a good cleaning.

One Saturday afternoon in July, as I tackled some serious mold buildup on our shower door, I finally decided to throw in the towel -- literally. I'd let things go for too long, as cleaning the bathrooms was taking a frustratingly long time. The bathroom is the household chore I dread most, and a regular cleaning by a housekeeper would free me of it, not to mention saving me time and guilt: As I toiled with the shower door, Gerald kept stopping by to remind me I'd promised to take him bike riding.

Gerry and I talked it over and decided to hire someone to clean every other week. We could easily keep up with straightening the house during the week, but it was the "spring cleaning" chores -- wiping down cabinets, cleaning out the refrigerator, and so forth -- that needed attention.

Our first decision: choose a house-cleaning service or hire an independent contractor.

A cleaning service in our area costs about the same as hiring an individual contractor. We'd be charged between $82 and $87 a visit; friends of ours pay their housekeeper about $80. That $87 is not a flat fee. Cleaning services typically charge based on many factors, including the size of your home, number of bathrooms, and whether you have pets.

But there's a much-steeper cost my friends must pay when hiring someone to work in their home: nanny taxes. By law if you pay a housekeeper or anyone employed to work in your home more than $1,500 a year, you must pay Social Security, Medicare, state and federal unemployment taxes and federal and state income taxes. Breedlove and Associates, an Austin, Texas, company that handles paperwork-filing services for clients with household workers, has a calculator that can help you figure out how much you'll pay. To pay these taxes, you'll need to file IRS Form SS-4 to get an employer identification number. You'll also need to file IRS Schedule H and provide your nanny with a W-2 form each year. (For details, see IRS Publication 926, "Household Employer's Tax Guide.")

Sure, there are companies (including Breedlove) that will do the work for you -- fees range from $36 to $55 a month. But outsourcing that on top of the cleaning would boost our costs from $160 a month for two visits from a cleaning service to $270 a month to hire an employee to work twice a month and hire a service to handle all of the paperwork.

Another option: pay a house cleaner under the table. When I wrote about my friends' Jim and Judy's plan to hire a nanny back in July, a number of readers responded that it was hard to find and keep good help unless they agreed to not pay taxes and report the income of their household workers. Some had hired illegal immigrants, while others said that if they paid the taxes they couldn't offer a competitive salary compared to families who paid their nannies off the books. While I can understand their motives, that course of action just isn't for us. (Sue Shellenbarger also offers some good reasons for paying the nanny tax).

The extra costs didn't seem worth the tradeoff, so we decided to hire a cleaning service. By going with a service we'd also avoid having to do such things as checking individual references -- the services we interviewed said they performed thorough background checks. Finally, as a newcomer to the idea of having a housekeeper, I liked the idea of dealing with a company rather than with the individual doing the cleaning: That would make things easier if we were ever unhappy with the service provided or worse, suspected the cleaner of theft.

I interviewed two companies, one a national chain and the other a local service, and found they both offered similar services and restrictions. Friends of our recommended the national chain, so I called two of its references and liked what I heard: "A good, thorough cleaning job." "Polite, friendly workers." The service was also bonded and insured, which would protect us if someone got hurt working in our home.

So we chose the national chain. I scheduled the first visit on a day I'd be home so I could watch the cleaners in action. I was impressed by how methodically the two workers took to the task at hand -- they each started in a different room and swept, straightened and scrubbed until that room was finished. It was so unlike the disorganized way I clean my home, moving from room to room and sometimes forgetting the original task in the process. (While straightening up Gerald's room, I'd pick up a wet towel and head for the bathroom to hang it up, only to notice the messy vanity and start cleaning it, abandoning Gerald's room in the process.) I realized my way of cleaning was wasting a lot of time.

After about an hour and a half the young ladies were finished and asked that I inspect their work. The rooms were immaculate and bathrooms gleamed. Worth every penny of that $87, I thought.

But as the weeks went by I began to notice the workers were getting sloppy in their cleaning -- one week they missed our half-bath entirely. I jotted down my concerns and contacted the service manager, who dutifully sent the workers out the next day to address the problems. Soon, though, the cycle would start again and the workers would start to slack off. The streaks on the countertops and floors would irk me and I'd end up pulling out my cleaning supplies and going over their work myself. Last month, I decided I'd had enough and called to cancel the service. The manager tried hard to keep my business, but by then I'd decided that the $87 a visit came with an additional cost -- the aggravation of having to continually complain about shoddy work, and the hassle of redoing that work myself.

Friends of mine who have their own housekeepers tell me my experience isn't common -- one in particular raves that his housekeeper does such a thorough job that "you could eat off my toilet." (Yuck.) But feeling burned by my first experience has me wary of trying a different service. For now, it's back to the drudgery of cleaning the house ourselves.

But the dust bunnies haven't won. From watching the house cleaners I've become much more efficient in how I clean, and I've encouraged Gerry and Gerald to adopt the same "clean as you go" habits that prevent dishes, clothes and toys from cluttering up the house. We're devoting less time to housekeeping each weekend, and saving $160 a month in the process.

-- November 27, 2006

By Terri Cullen

The Wall Street Journal Online

2006-11-27T20:14:00.000-08:00

FOR MORE HOMEOWNERS, THREAT FROM LIGHTNING IS A WORRY

The cost of homeowners' claims for damage due to lightning strikes is soaring because of the burgeoning number of high-end electronic items and appliances in the average home, insurers say.

Hartford Financial Services Group Inc. says that the cost of claims the company paid due to lightning strikes rose 77% between Jan. 2001 and July 2006, even as the number of claims fell in the period by nearly half. Some of the nation's largest insurance companies, including State Farm Insurance Cos. and Nationwide Mutual Insurance Co., also say they're experiencing a similar trend.

Insurers partly attribute the higher losses to the growing number of home-theater systems, plasma and high-definition television sets, game consoles and personal computers in the average American home -- which all can be fried by a surge of voltage in a home's electrical wiring that can occur from a lightning strike. Rising rebuilding costs are also a factor because in the worst instances, lightning torches the house either from overloading appliances or from a direct hit.

A State Farm spokesman says the company believes policyholders are filing fewer claims for lightning damage -- and other losses -- because of fear their rates will go up. But the claims they do file are larger.

Janice Dlatt, of Buffalo Grove, Ill. learned about lightning the hard way. She and her family suffered $10,000 in losses when a lightning strike burned out their hard-wired home-alarm system, heating and air-conditioning system, ceiling fans, TVs, VCRs and phones. "I consider ourselves lucky because my house didn't burn down. It was a small strike with a lot of voltage. It actually hit the flue from the furnace on the roof," she says.

Lightning strikes in the U.S. also cause an average of 6,100 residential fires and $144 million in direct property damage, according to the National Fire Protection Association, a nonprofit code- and standard-setting group.

Homeowner's insurance policies cover damage from electrical storms, less the deductible, but insurers say much of it could be avoided with the proper precautions.

A lightning-protection system can help save your gadgets and your house and in some places, may be a requirement under local building codes. The system, which provides a safe path for electricity to follow and discharge, should be installed by a qualified and licensed electrician and in compliance with local building codes and guidelines of the National Fire Protection Association (NFPA standard 780) and Underwriter's Laboratories, the safety organization. The system includes a lightning rod or air terminals at the top of the house that can be disguised to look like a weather vane and wires to carry the current down to grounding rods at the bottom of the house. Installing such a system costs about $1 to $1.50 per square foot for the average U.S. home.

A whole-home surge arrestor installed near the main circuit-breaker panel or the electric meter helps prevent excess voltage from passing through the house's wiring, damaging electrical equipment and possibly starting a fire. A whole-house arrestor system, which averages from $150 to $500, is also a job for a professional electrician.

As for doing it yourself, surge suppressors that you plug into electrical outlets help prevent excess voltage from damaging specific appliances and equipment. True surge suppressors shouldn't be confused with ordinary power strips that don't offer protection. Surge suppressors cost an average of $12 to $30 in hardware and appliance stores. They should have a label that reads UL standard 1449 and have a suppressor voltage rating, or SVR, of 330 volts. The lower the SVR number, the better the suppressor will be at protecting appliances and electronics.

Suppressors deteriorate with age and after a surge. Some have audible signals or flashing lights to indicate when they have worn out and should be replaced.

"If you are going to pay $2,000 for a new TV, spending $20 for a new surge suppressor is a good investment," says Richard Roux, senior electrical engineer at the NFPA.

A simple solution would be to unplug your devices before electrical storms. And to cut your chances of being shocked yourself during a storm, avoid using electrical appliances, corded phones and plumbing during lightning and thunder, safety experts say. It's safest not to shower, do laundry or wash dishes, either. Electrical storms are most likely to occur during the summer and in the South and Southwest, but occur across the U.S. and throughout the year.

-- November 22, 2006

By M.P. McQueen

The Wall Street Journal Online

2006-11-24T11:48:00.000-08:00

HOUSE-RELATED READS FOR THE HOLIDAY SEASON

The holiday season is upon us, twisting our brains with the usual worries about what to give our loved ones. Fortunately, a book is one-size-fits all gift, and even more fortunately, there are a few new ones out on home-related topics that are worth giving:

"Manspace," by Sam Martin (Taunton, 2006). For the red-meat-eater on your list, this book focuses on guyspace, the few places left over in a home once the females finish decorating -- areas like garages, spare bedrooms, unfinished attics and outbuildings. So what do these men do with these spaces? Why decorate them, of course, and sometimes quite cleverly (one fellow put a concrete climbing wall in his home office; another a boxing ring in his garage). But not all of the décor drips testosterone: for instance, one man put a red velvet couch in his stable-turned-photographer's studio and trimmed the eaves with fleur-de-lis gingerbread. In all, a book that's funny and imaginative enough to pull the reader away from ESPN, at least for a little while.

"Where We Lived," by Jack Larkin (Taunton, 2006). Like all good coffee table books, this tome has fabulous pictures -- in this case, dozens of photos of early American houses, ranging from tumbledown shacks to mansions, taken from the Historic American Building Survey, a project launched during the Depression to help out-of-work photographers. But unlike most coffee table books, this offers fascinating text as well as an exhaustively researched, yet never boring glimpse at how Americans lived just a few generations ago. When Mr. Larkin, a historian and professor, describes how an 18th-century gentleman visitor suffered living with 12 other people in the four-room house of his host, we can almost hear the loom rumbling and clacking, smell the stench of rarely-washed bodies in close quarters and feel the lice crawling. But while Mr. Larkin doesn't shy away from the most delicate topics, like outhouses and chamber pots, he always handles them with warmth and humor. For instance, he writes this about chamber pots, which were often given as "bawdy wedding presents": "It has earthy verses on both sides that clearly celebrate married sexuality, a green ceramic frog climbing over the top, and a painted face on the bottom exclaiming, 'Oh Dear Me! What Do I See?' and 'Keep Me Clean and Use Me Well, and What I See I Will Not Tell.'"

"Home: The Blueprints of Our Lives," by John Edwards (Collins, 2006). Yes, he's probably running for president, and yes, writing a heartwarming book about one's humble origins has become a rite of passage for presidential hopefuls...but that doesn't negate the fact that this is a heartwarming book. That's partly because the former Senator from North Carolina hasn't kept the spotlight on himself. Instead, like a certain former Senator from Massachusetts who also wrote a book before running -- successfully --for president back in the '60s, Mr. Edwards shifts the focus to others like John Glenn, Maya Lin and Steven Spielberg, all of whom have contributed chapters on their early memories of home.

Not surprisingly for a politician, Mr. Edwards' own memories aren't very colorful or revealing ("for me, home isn't the little two-bedroom brick house in Seneca on Mountain View Road; it's my mother crying as I leave for my first day of school..."). But many others are, and some, like that of musician Nanci Griffith's memories of her grandfather's house, are hilarious and worth the price of the book: "Every day my grandfather would have sardines and pinto beans for lunch. Sometimes after lunch he would tell my grandmother he was taking me to the library. We'd head downtown to Sixth Street, which back then was all old piano bars and domino parlors. When I started school and he took me to the actual library, my first reaction was 'This isn't the library.'"

-- November 20, 2006

By June Fletcher

Real Estate Journal Online

2006-11-22T20:34:00.000-08:00

TIPS FOR SAVING MONEY ON YOUR HOT-WATER BILLS

When the days grow nippy, nothing beats a long, hot shower to warm things up. But at what expense? The Department of Energy says water heating accounts for 14% to 25% of the energy consumed in your home. Here are tips from the department for reducing your water heating bills:

Set the thermostat on your water heater to 120° F. If you lower it by just 10ºF, you'll save 3% to 5%. For most homes, 120 ºF, or even 115 ºF, is sufficient.
Consider getting a more efficient water heater for your home. Natural-gas-on-demand or tankless water heaters can save you up to 30% compared with standard natural-gas storage tank water heaters. Or, just buy a new energy-efficient water heater. It costs more up front, but you'll save over time.
If you buy a solar water heater, you might be eligible for a tax credit or rebate. Look for details in the Database of State Incentives for Renewable Energy at www.dsireusa.org.
Drain a quart of water from your tank every three months. You'll remove the sediment that lowers the efficiency of your water heater.
Place heat traps on the hot and cold pipes connecting to your heater -- you'll prevent heat loss.
Insulate your hot water pipes -- doing so can raise water temperature 2ºF-4ºF.

-- November 16, 2006

By Marshall Loeb
The Wall Street Journal Online

2006-11-20T13:45:00.000-08:00

DECLINING AFFORDABILITY PUSHES
HOMES OUT OF REACH FOR SOME

Despite low mortgage interest rates, a smaller percentage of first-time home buyers are entering the market, according to an annual profile of buyers and sellers released by the National Association of Realtors on Saturday.

During the year ending in June, 36% of all buyers who purchased a home were first-time buyers, according to the association's annual profile of home buyers and sellers. That's down from 40% a year ago. About 7,500 buyers and sellers were surveyed.

Part of the reason for the declining share of first-time homeowners: Declining affordability for those entering the market after the housing boom of the past couple years bumped up home prices, said David Lereah, the NAR's chief economist, during a news conference held at the Realtors' annual convention here. A greater number of second-home sales also may have contributed to a lower percentage of first-time buyers overall.

"I hope that it's not a trend. I hope that as affordability starts to improve we see more first-time home buyers," he said. "It's critical for the housing sector."

The percentage of single female home buyers, however, inched up in the survey to its highest level on record. Twenty-two percent of all home buyers were female and on their own, up from 21% a year ago and up from 14% in 1995. In comparison, single males accounted for 9% of home buyers, unchanged from last year.

Other statistics helped validate the jobs of the thousands of Realtors at the convention: 80% of home buyers said they used the Internet to search for a home, but 85% relied on a real-estate agent as a source of information about homes for sale. And 36% first learned about the home that they purchased from an agent, versus the 24% who learned about the home that they purchased online. Among those who used the Internet to search for a home, 81% purchased a home using a real-estate agent.

Although real-estate agents were leery of the Internet 10 years ago, fearing it would take away business, 80% of firms now have their own Web sites, Lereah said.

"What the Internet has done for consumers, potential buyers, is provide them with information, give them a comfort level," he said. "But it all comes down to you're making the biggest financial transaction you're ever going to make for 99% of these people -- and they need guidance, they need someone they can trust and who has been through this before."

From the seller's side

Reflecting the beginning of a softening market, sellers had their homes on the market for a median of 6 weeks, according to the report, an increase from the 4-week median reported a year ago. "It makes some sense: We had a boom in 2005, and in this time period, we're coming to a close and beginning to stall," Lereah said.

The typical home sold for 98% of the listing price in this year's report; it sold for 99% of its listing price a year ago. But even in this year's figures, 12% of homes sold for more than its listing price.

Nineteen percent of sellers said that the primary reason for selling their home was because it was too small, while 13% said the neighborhood was less desirable and 10% decided to move so they could be closer to their job. The typical home seller owned their home six years.

Twelve percent of sellers said they sold their home without a real-estate agent, down from 13% a year ago and 20% -- the report's recorded high -- in 1987. Of those who sold their home on their own in this year's survey, 40% said they sold the property to someone they already knew.

Of those who did use an agent, 73% used a full-service agent, 8% used a discount broker and 7% used a minimum-service agent who may have done as little as list the home on the Multiple Listing Service, the survey found.

"Limited and minimal brokerage services cater largely to owners who would prefer to sell on their own but recognize they need some level of professional help," Thomas M. Stevens, president of the National Association of Realtors, said in a news release. "These services generally are a good match for certain consumers, and help to explain a decline in owners selling purely on their own."

-- November 20, 2006

By Amy Hoak

Marketwatch

2006-11-17T09:25:00.000-08:00

NAR: HOUSING SPIRAL MOSTLY OVER

NEW ORLEANS -- The worst of the housing downturn is over for three-quarters of the country, the National Association of Realtors' top economist said here earlier this month.

Noting that like politics, "all real estate is local," David Lereah, the chief economist of the nation's largest trade organization, said 74 percent of the nation's housing markets will once again be expanding "in a sluggish way" in 2007.

Mr. Lereah divides the country into five "divergent" sectors:

Non-Boom Stallers, or places which never participated in the housing boom which began 15 years ago
Non-Boom Gainers, or markets which didn't participate in the boom but grew nevertheless.
Boom Lites, or markets which shared only slightly in the boom.
Average Boomers, or places which took part in the explosion but only on an average basis.

Hot Boomers, or places where house prices jumped out of sight.
Only the last group, which represents 26 percent of the country, still has a ways to go to work their way back to normal, Lereah said at NAR's annual convention here. "The correction is pretty much over with" for the rest, he added.

The economist would not hazard a guess as to how low prices would need to fall in the most overheated markets or how long it would take for them to hit bottom, saying it would be "pure speculation" on his part or that of anyone else.

But he did say that the places where speculators were most active will be the ones that take the longest to work their way back to equilibrium.

He also said price corrections should be welcomed, not feared. "What gives health to the economy is sales -- the number of transactions -- not price," he said. "Every 1 percent drop in prices qualifies 50,000 more potential purchasers."

"We now have the most favorable market for home buyers in years," Lereah said, noting that sellers are starting to be "more realistic about current market conditions" and pricing their properties more appropriately for the downturn.

"Conditions for buyers have improved because sellers are flexible now and mortgage rates are near historic lows," he said. "And sellers who have been in their homes for a normal period of ownership are still seeing very healthy returns on their investments."

Lereah expects existing home sales in 2007 to "coast" at roughly the same level as this year, which, despite a projected 8.6 percent decline to 6.47 million, will go down as the third best year on record.

New home sales, on the other hand, should fall 8.7 percent to 975,000 units, largely because many builders have slowed their pace of construction, according to the NAR economist. Such a decline would be on top of the expected 17.8 percent drop to 1.07 million units this year.

Despite the slow down, however, Lereah is still predicting slight increases in housing prices. For this year, he says the national median for existing homes should rise by 1.9 percent, to $223,700.

And for 2007, he expects a 1.7 percent increase to $227,500.

New homes prices, on the other hand, should slip by 1.1 percent this year, to $238,400, and then go back up 1.3 percent next year, to $241,400, he said.

Published: November 13, 2006

By Lew Sichelman

Realty Times

2006-11-15T17:47:00.000-08:00

HOUSING CORRECTION HAS FURTHER TO RUN, REALTORS PREDICT

The housing market correction has further to run, with new-home construction expected to fall another 12% next year, a real estate industry group said Friday in an updated forecast for 2007.
While the market for existing homes will probably flatten out, the new-home market will probably continue to slow through next year, said David Lereah, chief economist for the National Association of Realtors.

Sales prices are expected to rise slightly. "Given the huge gains in home values during the housing boom, and this year's rise in housing inventory, overall price gains this year and next will be modest," Lereah said. Median existing-home prices are expected to rise 1.7% next year, while new-home prices are expected to rise 1.3%.

Housing starts will probably fall about 12% next year to 1.63 million after falling 11% this year, he said. Starts totaled 2.07 million in 2005.

The NAR forecast for housing starts for 2007 is close to the Blue Chip consensus forecast of 1.62 million. The Blue Chip forecast is derived from the forecasts of 54 economists surveyed by the publication Blue Chip Economic Indicators.

New-home sales will probably fall 8.7% next year to 975,000 after plunging about 17% this year, the realtors said.

Existing-home sales will probably fall 0.6% to 6.43 million next year after sinking 8.6% this year, he said, adding that sellers are becoming more realistic.

"We now have the most favorable market for home buyers in several years," Lereah said.

-- November 13, 2006

By Rex Nutting

Wall Street Journal Online

2006-11-13T21:55:00.000-08:00

WHAT TO DO WHEN A BUILDER OFFERS TO FIND YOU A LOAN

Thinking of buying a new home in this softer market? Chances are your builder is going to try to sell you a mortgage.

Builders have long encouraged their customers to use their mortgage affiliate for financing, and not just to make a little extra money. It also gives them control of the transaction, making it less likely that a mortgage snafu will create problems at closing. Now, as sales slow and cancellations rise, builders are increasingly rolling out special deals that may be tied to using their affiliated lender.

But you may well be able to find a better deal on your own. Builders' mortgage offers "clearly are worse in all the cases I've seen," says Jack Guttentag, professor emeritus at the University of Pennsylvania's Wharton School and founder of the mortgage-advice Web site www.mtgprofessor.com.

When Randy Gowler, a Olathe, Kan., architect, wanted to buy a new four-bedroom home this year, the builder offered to pick up the first $8,500 in mortgage payments. The catch: Mr. Gowler had to use the builder's affiliated lender and pay the full $287,000 asking price. Mr. Gowler crunched the numbers and turned down the deal. Instead, he went with an outside lender that offered a lower interest rate and paid $274,000.

Unlike Mr. Gowler, most home buyers stick with the builder's lender. Pulte Homes Inc. says Pulte Mortgage provides financing for 90% of its buyers who need a mortgage. Centex Mortgage finances 80% of Centex Corp. customers. Most builders either have a mortgage affiliate or preferred lenders they work with.

Builders say their rates are competitive and that their mortgage affiliates give them more control over the sale. Indeed, getting a loan through your builder can be a plus if construction is delayed, says Greg McBride, a senior financial analyst with Bankrate.com, because a builder's mortgage unit is more likely to be flexible if there are construction delays.

As the housing market has cooled, many builders have sweetened the pot with special deals. A September survey conducted by the National Association of Home Builders found sharp increases from last year in the number of builders offering to pay closing costs and other fees and in those reducing home prices.

In many cases, home buyers must use the builder's financing arm to qualify for these offers. That's particularly true if the incentive is mortgage-related, such as when the builder pays closing costs or picks up several months of mortgage payments. Buyers may also be required to use the builder's mortgage unit to qualify for a reduced purchase price, builder upgrades or other concessions.

Some competitors say that these requirements put buyers at a disadvantage. "They prevent consumers from shopping to see if there's a better deal out there," says Marc Savitt, vice president of the National Association of Mortgage Brokers. The savings from incentive programs are often illusory, he says, because the home buyer is charged a higher mortgage rate or more in fees and closing costs by the builder's mortgage affiliate.

The builders disagree. "This is really about special interests trying to limit competition -- and increase their profits -- by legislating home builders out of the mortgage business," the National Association of Home Builders said in a statement.

Federal rules prohibit builders from requiring that home buyers use their mortgage affiliates. The rules also require that any discounts offered to buyers who use these affiliates must be true discounts and not made up through higher charges elsewhere.

The Department of Housing and Urban Development says it is getting more complaints not only from mortgage brokers, but also from consumers. One builder canceled a purchase contract and refused to return an $11,845 down payment after the buyer decided to use an outside lender. After HUD intervened, the builder's mortgage company agreed to buy down the rate to make the loan more competitive. Another builder agreed to waive $5,360 in mortgage-origination fees that a buyer was being required to pay in order to qualify for $13,450 in incentives.

To make sure you're getting a good deal, ask the builder not only for the mortgage rate, but also for details on closing costs, points, any fees that will be paid to the lender or third parties, and the terms of the loan. Prof. Guttentag advises comparing that offer to a quote for the same mortgage obtained on the same day from an online lender. He also suggests shopping for financing at the same time you look at houses.

Whether the builder's deal is worth taking can also depend on how long you plan to stay put. A slightly higher mortgage rate may not be a problem if you plan to move in a few years, but it could wipe out the benefits of any incentives if you plan to stay in your home longer. You should also check what comparable homes are selling for to determine whether the builder is offering a real discount.

It can pay to negotiate. When Scott Lazaroff, an engineer, bought a new home in Lyons, Colo., in September, the builder offered to knock an extra $15,000 off the price if Mr. Lazaroff used its affiliated lender. He decided to use his own lender, but still convinced the builder to reduce the price by $10,000. Dan Gracey, another Colorado home buyer, said his builder came back with a lower mortgage rate after he "pushed back" on its original offer, which was higher than the competition.

Jonathan Clements is on vacation.

-- November 13, 2006

By Ruth Simon

Wall Street Journal Online

2006-11-10T15:32:00.000-08:00

KEEP YOUR HOME FIRE-SAFE

Wildfires are no stranger to California homeowners, but no matter where you live, it's likely that the threat of a fire can occur. However, if you have taken precautions, there is a good chance you can prevent a fire from completely destroying your home.

“There are certainly wildfire issues all across the nation. East coast, Florida, has fires every year,” says Christopher Blaylock, Project Manager for Wildfire Education at San Diego Natural History Museum.

In San Diego, California, the Santa Ana winds cause tremendous problems during fire season. Just recently, the wildfire near the Palm Springs area took the lives of five firefighters while on the job.

It's a scary thought to consider that a fire can level your home in seconds. The best prevention is to know your environment, the risks of the area, and then prepare for the worst.

Some homeowners, who are building their own homes, never give it a second thought that where they are building could be dangerous.

“It's about a larger trend that is happening across the nation where there is increasing development into these wild land areas without necessarily the recognition that the natural environment has certain things like wildfire that may affect homes,” explains Blaylock.

Blaylock and the San Diego Natural History Museum are hosting a series of workshops in March 2007 called, “Protecting Homes and Communities from Wildfire: Preventative Cross-training Education for the Business Sector,” for businesses and professionals who work in and around home sites in the wild-land-urban interface.

“I used to work with the National Park out in Southern Missouri in the Ozark's National scenic river ways; their fire season is winter, that's when things get dry out there and that's when everything starts shriveling up and getting ripe for wildfire,” says Blaylock.

As a homeowner you can begin to make your home fire-safe with a few simple tasks.

“There is really no one thing that you can do that will guarantee that a home will survive a wildfire,” says Blaylock.

Instead he recommends looking at the big picture and protecting your home via several methods as well as understanding what can cause a home to burn.

Use Fire Safe Materials

When building a home or replacing a roof, use fire-safe and non-combustible materials. Look for materials such as brick, stucco, or Class A roofing that won't easily ignite and choose these over others. Also, use fire-resistant material to enclose the undersides of areas such as decks, eaves, and balconies that are located on slopes because, if they are left open, embers can land there and ignite a fire or flames can become trapped underneath the home.

Reduce Ember Penetration

It sounds a bit technical, but the bottom line is embers travel with the wind rapidly and to incredibly great distances. Homes in San Diego have burned because embers blew, maybe from a mile away, and then lodged into crevices of the home and ignited the house.

“When you're looking at your house [identify] where embers can get into the house or rest near the house and ignite something,” says Blaylock.

Embers tend to land on leaf piles, or “they get into your attic through the vents or something like that and they get to the insulated materials and are able to ignite,” says Blaylock.

Create a defensible/survivable space

Flames can get up to 100 feet high in extremely fire-prone conditions. “That's where the 100-foot clearance code comes from and it's important to understand that doesn't mean clear to the bare ground, but it's a matter of can you break up what we call contiguous fuels,” explains Blaylock.

For example, if you have very dense, dry brush around your home that can become contiguous fuel should a fire occur -- the brittle brush can become a path for the fire to follow and burn.

“If you could break up every other bush, the fire can't necessarily travel through it as fast or as hot. Therefore as the fire approaches the home you can reduce the flame length and the heat that the house is exposed to by maintaining your home in such a way as to accomplish that. That is commonly referred to as defensible space or survivable space,” says Blaylock.

Maintenance

Maintenance is extremely important. What is often the fire hazard is not the tree but rather the accumulation of leaves beneath it. The trees around a home can be beautiful, if they are well maintained; if not, what an uncared for tree leaves behind can be hazardous.

“If that particular tree, for whatever reason, has been neglected -- it isn't watered, so it's dry and it has very dry leaves -- maintenance is one of the biggest things homeowners can do [to prevent the loss of their home to fire],” says Blaylock.

Blaylock also recommends contacting your local fire marshal for information on protecting your home from fire. Additionally, he says always have an understanding of the environment you live in -- make sure you know how severe the fire-risk is in your neighborhood.

If you take the time now to make your home and its environment fire-safe, you'll be better prepared should a natural disaster occur and you'll likely have better odds of your home surviving it.

Published: November 6, 2006

By Phoebe Chongchua
Realty Times

2006-11-08T21:14:00.000-08:00

BANKERS SAY PEOPLE WHO BORROW AGAINST HOME EQUITY ARE THE CREDIT ELITE

If you’re one of the millions of Americans with a home equity credit line or a second mortgage loan, you are almost certainly among the nation’s credit elite.

A new study by the Consumer Bankers Association found that the average home equity borrower this year has a FICO credit score of 730, a household income of almost $90,000, a home worth $337,000, and an existing first mortgage of $169,000. The average new equity credit line taken out this year has been for $84,812, while the average home equity loan or second mortgage has been for $57,800.

Home equity borrowers typically have sound financial management purposes in mind when they tap their home equity, according to the study. Fully 53 percent of new equity loans this year have been for refinancing existing debt -- typically higher-cost consumer debt -- and 16 percent were intended primarily for major home improvements. Another 15 percent of borrowers said they took out equity loans to help purchase additional real estate -- a second or vacation home or investment property.

Equity loan borrowers tend to be older on average than the general population -- 73 percent were between 35 and 64 this past year -- but youthful equity-tappers are a growing segment of the market as well: Thirteen percent of new borrowers are homeowners between 20 and 34 years old.

Consumers with equity lines and loans are exceptionally disciplined in paying back the bank. Just 0.6 percent of equity loan borrowers and 0.76 percent of credit line customers were late on payments during the past year. Both rates are below prevailing delinquency rates for conventional first mortgages, and far below subprime delinquency rates on primary home loans.

But the performance of equity loan customers has begun to diverge sharply from the performance of equity credit line customers. Equity loan borrowers’ delinquency rate of 0.6 percent was down significantly from 0.92 percent in 2005 and 1.3 percent during 2004. Credit line borrowers, by contrast, are showing signs of rising delinquencies. Their 0.76 percent rate for 2006 was up dramatically -- by 73 percent -- from their rate of 0.44 percent in 2005 and 0.46 percent in 2004.

The likely cause: credit lines predominantly have carried floating rates tied to the Wall Street bank prime rate, which has risen steadily for nearly two years in the wake of the Federal Reserve Board’s ratcheting up of short-term rates. Credit line customers who took out lines at 4 percent during 2004 are now often paying 8.5 or 8.75 percent a month -- pushing them to search for alternatives.

As a result, the hottest trends among banks offering credit lines are various programs designed to convert portions -- or the entirety -- of floating-rate lines into fixed-rate lines or loans. For example, the Bank of America, Wells Fargo, Citicorp, and JPMorgan Chase all permit any of their credit line customers to convert portions of their outstanding balances to fixed-rate, usually at no cost.

Top executives of each of those banks say their new flexibility on credit lines is intended to discourage credit line borrowers from refinancing their first mortgage and “cashing out” enough additional money to pay off their rising-cost lines. A secondary purpose is to keep borrowers out of delinquency trouble.

“Even though these are some of our very best customers,” says Doreen Woo Ho, president of Wells Fargo Consumer Credit Group, “we have to be sensitive to their financial needs as (short-term) rates increase.”

Published: November 6, 2006

By Kenneth R. Harney
Realty Times

2006-11-06T20:17:00.000-08:00

HOW TO HOLD TITLE

A great teacher taught me years ago that many of the nuances of real estate law only matter when it matters. How you hold title is one of those nuances and it really matters when it matters.

Consider the case of one of our distraught readers whose significant other had placed both their names on the title in Joint Tenancy more than three years ago. Just a few months later, the relationship went south, and the significant other wanted to switch everything back the way it was before the Joint Tenancy agreement.

The problem was this reader pointed out that she had "made monetary contributions to ALL the upgrades done within the house, paying for 90 percent of the total renovations done which has increased the value of the property as well. I contributed to the household over the years I was there, but did not specify that these funds went to the mortgage, and these funds went to whatever. I just want to be fairly compensated for my "loss." As a Joint Tenant, technically I am entitled to 50 percent of the equity, right? I am not on the loan. Help and fast. He sent me a letter from a lawyer and I want to make sure I know what I am talking about before I respond."

There are several ways of holding title to property and if what this person wrote is correct, asking for a quit claim deed is not one of the guaranteed 50 ways to leave this lover without an interest in the property, or at least a court appearance.

In a married situation, the joint tenants form of holding title is the most popular, as the property then passes to the surviving party in case of death without being left in a will. The form of title is established to create such a passing on of property. Thus, our spurned owner above, actually has a legal foot to stand on with the financial support provided in the property -- but primarily, because of the form of title -- to be able to receive some sort of remuneration following the impending break up of the relationship. Her best move is to take it to court.

Though joint tenancy is the most popular form of title used among married couples, it doesn't mean that the ownership title is for only two people. If, for instance, you go into a business transaction to invest in property with a couple of investors, this may be a form of ownership you would want to use so that the ownership passes back to the other owners if one of the partners dies.

However, if an investor desires to pass property on to his or her heirs at his or her death, joint tenancy would not be the desirable title. Instead, the investors would want to have title by "tenants in common."

Nevertheless, the reader has a couple of options in the dissolution of this ownership. She could, as her former beau has requested with an attorney's letter, sign a quit-claim deed, signing over all ownership back to the other owner. In a divorce cases, this is the usual method of dividing property, but comes only after a separation agreement and a property settlement has been signed, sealed and delivered, via the court system. Finally, in the dividing of property, someone gets the house -- or the co-owners are forced to sell and divide the proceeds.

Here are a few resources in determining how you may want to hold title for your next purchase:

DivorceNet.com

FindLaw.com's Real Estate Center

Relocat.com (online comparison chart on how to title property)

Published: October 27, 2006

By M. Anthony Carr

Realty Times

2006-11-03T12:59:00.000-08:00

COLLAPSIBLE FURNITURE FOLDS INTO FALL HOME DECOR

You might think that I’m referring to a folding card table that’s pulled out for poker games or to give a little extra room for a craft project. However, that is not the type of collapsible unique furniture that’s making its way into many homeowners’ abodes.

It seems that furniture that, by definition, can collapse -- fall down or fall to pieces -- would not be in favor with consumers, but how about if the furniture collapsed only when you wanted it to and the collapsing made the furniture conveniently smaller to suit your everyday needs? Presto, success!

These days, space is often a sparse commodity. Homeowners are looking for ways to fit all their possessions into their homes without cluttering their living area. Thus, the consumers are falling in love with folding items. Hampers, storage shelves, fold-up, flatten-out chairs, and even decorative vases are not viewed as cheap but rather chic.

Of course, as with any home decor, there are levels of quality. Searching for the right look and the best made product will ensure that function and style intersect appropriately. The hunt can be an exhausting experience that causes you to collapse on your couch after a long day of looking for collapsible furniture. So, here are a few places on the Internet that can let you see some options without even leaving your home.

Wine connoisseurs might find they are immediately drawn to an unusual wine barrel chair. Hand made in Northern California, it is salvaged from 70-gallon oak wine barrels. While I can’t be certain as to how comfortable this piece of furniture is, it really does make a statement. See it here.

Your next shopping stop on the World Wide Web might be garnethill.com.

Here you’ll find some space-saving techniques as well as nifty items that collapse completely flat when not in use. A storage basket that holds up to 55 pounds can be used for a picnic or as part of your home décor in the bedroom or bathroom area. Or you can order hanging storage shelves that provide space where you need it and then collapse when you don’t need the extra storage.

A gorgeous crystal vase is definitely beautiful, but a trend that’s taking hold in many consumers’ homes is a little showy and more simplified. A collapsible vase is perfect and it holds your floral arrangement with a stylish twist. The vase is delivered to your home as flat as a sheet of cardboard. When you fill the vase with hot water you can then mold it to any shape you like. Find the vases at leevalley.com.

Often a staple in college dorms and children’s rooms, collapsible hampers are showing up in many more places too. Umbra has a selection of natural cotton canvas collapsing laundry baskets. View them at umbra.com.

More desk space is frequently needed, but sometimes you want a desk to appear smaller when the extra surface-top space isn’t needed. The solution can be found at Home Decorators collection.

The Beadboard Foldaway Desk features sides that fold down and out of the way, allowing this piece of furniture to collapse to less than half the width.

Collapsible furniture can provide a creative home décor style while also giving you the versatility needed.

Published: October 30, 2006

By Phoebe Chongchua
Realty Times

2006-11-01T19:30:00.000-08:00

CONGRESSIONAL COMMITTEE PROPOSES CRACKDOWN ON HOMEOWNER TAX WRITEOFFS

Have you been writing off your mortgage interest and real estate taxes correctly on your federal income tax filings? Or maybe not?

Whatever your answer, an influential Capitol Hill committee believes tens of thousands of homeowners have been deducting a lot more than they should -- to the tune of hundreds of millions of dollars a year.

Now the nonpartisan congressional Joint Committee on Taxation has proposed to the Senate and the House that they consider plugging two revenue-losing loopholes in the system, and crack down on homeowners who are deducting too much.

In a new report released last week, the staff of the committee recommends requiring local governments or mortgage lenders to annually report to the IRS the itemized details of the property tax payments claimed by millions of homeowners. Property tax deductions now cost the federal government $20 billion a year, according to committee estimates. A 1993 federal study found that approximately $400 million of that year’s property tax writeoffs were improperly claimed -- a figure that could easily be double that today.

Under current tax code rules, homeowners are permitted to write off local and state property taxes that are assessed on the basis of property valuations. But commonplace special levies and user fees -- for governmental services that mainly benefit individual houses or neighborhoods rather than the entire municipality -- are not deductible.

Special parkland improvements, sewers, sidewalks, garbage collections, landscaping, tennis courts and a long list of others sometimes are funded by tax levies on the property owners directly benefited. Local governments typically include their special benefit levies in with their regular property tax bills when they send them to homeowners, but they do not report the itemized breakdowns to the federal government.

The committee believes the IRS would be in a better position to audit homeowners’ tax deduction claims if the agency received an annual itemization -- either from local governments directly or from the mortgage lenders who typically disburse the tax payments from their borrowers’ escrow accounts. Since lenders already report total mortgage interest paid by each borrower to the IRS, the committee believes it would not be a major inconvenience to add in property tax itemizations with those reports.

The staff recommends that either local governments or mortgage lenders be required by federal law to provide the IRS with such itemizations annually.

The committee’s second target for real estate-related loophole closing involves home mortgage interest -- a $70 billion revenue-drain item in this year’s budget. The committee believes that many homeowners who refinance their mortgages improperly claim “points” on their interest deductions for the year of the refi. But IRS rules require refinance points -- interest paid in advance -- to be written off on a pro-rated basis over the life of the loan.

The committee also believes that homeowners who do cash-out refinancings may be writing off mortgage interest improperly -- claiming deductions on more than the $100,000 in home equity debt the tax code permits.

To close both loopholes, the committee proposes requiring all mortgage lenders and servicers to report whether new loans are refinancings, and whether the refi resulted in a new loan more than $100,000 larger than the mortgage it replaced.

The committee staff’s recommendations are often highly influential and find their way into law. So don’t be surprised if the new real estate proposals surface early in the new Congress next year for inclusion in a major tax bill.

Published: October 30, 2006

by Kenneth R. Harney
Realty Times

2006-10-30T21:32:00.000-08:00

NAR RELEASES BABY BOOMER STUDY

Baby boomers are like the vaudevillian who doesn't know when to leave the crowd laughing. They have dominated the economy, housing, product development and just about every other trend since they arrived on the scene in 1946. But the party's over in about 12 years, when they will no longer be the largest population segment in history, nor the largest body of consumers. But until then, they remain the most powerful demographic force in the U.S., particularly when it comes to housing.

According to a new study by the National Association of Realtors® conducted by Harris Interactive, the generation born between 1946 and 1964 is living longer but has no set path for retirement, a finding that may have developers, builders and Realtors in a tizzy.

"The differences from past generations -- and between baby boomers themselves -- will have a significant impact on housing needs over the next 10 to 20 years that is very different from the World War II generation, and many boomers simply don't know how they'll retire," observes David Lereah, chief economist for the NAR. "A significant portion of baby boomers married later in life and had children at a later age, which means many will continue to work beyond the traditional retirement age. Older boomers are thinking about retirement, but one-third expect to go back and forth between periods of work and periods of leisure, and another 35 percent want to work at least part-time or start a business -- all of this will have an impact on the kind of homes they buy as well as where they buy them."

The median age at which baby boomers expect to stop working is 70, but 27 percent say they never intend to stop working. Just over one-quarter are ages 55 to 60.

He said most baby boomers are still in the workforce, and many have children living at home, which makes them a continuing force in the housing market.

"Because they will be in the workforce longer, boomers will postpone purchase of retirement property and won't be making those moves as early as assumed," Lereah said.

Peter Francese, an independent demographic trends analyst and founder of American Demographics magazine, consulted on the findings. "For the vast majority of baby boomers, retirement is somewhere off in the future," he said. "Considering that boomers are healthier than their predecessors, and are more likely to work in an office setting, many of them may work five or 10 years beyond the traditional retirement age of 65," he said.

Given a longer tenure in the work force baby boomers may choose a larger home than earlier generations, speculates Francese. "Boomers may want or need a somewhat larger dwelling that includes one or two home offices, and a low-maintenance home on a single level would have broad appeal to this group," Francese said.

Not surprisingly, most boomers live in two-income households, with a median income in 2005 of $64,700, which is 31 percent higher than the median for all households. This generation makes up 37.5 percent of U.S. households, but receives nearly half of all aggregate household income. "This translates into a lot of purchasing power, and helps to explain why 8 out of 10 boomers are homeowners," Lereah said.

For baby boomers earning $100,000 or more, the study shows that more than 9 in 10 are homeowners. Among middle-income boomer homeowners, home equity accounts for fully half of their net worth. Even so, 19 percent of respondents are renters, 37 percent say they have just enough to make ends meet and 17 percent say they are having financial difficulty.

A quarter of baby boomers own one or more other kinds of real estate in addition to a primary residence: 13 percent own land, 8 percent own rental property, 7 percent a vacation home or seasonally occupied property, 2 percent commercial real estate and 3 percent some other kind of real estate. Four out of 10 respondents intend to convert their vacation home into a primary residence in retirement. Analysis by NAR shows baby boomers are proportionately more active in the second home market, owning 57 percent of all vacation/seasonal homes and 58 percent of rental property.

Ten percent of boomers indicate they plan to buy some form of real estate within the next year, which corresponds with Census data that shows 3.5 million boomer households moved during the last year. Two-thirds are considering a primary residence, but the rest are thinking about land, second homes or commercial property.

Most survey respondents were unsure of their financial future, says NAR, with three-quarters saying they are not financially prepared for retirement and many expressing anxiety about their ability to retire. Some boomers said they might withdraw retirement funds for housing or real estate expenses.

Where boomers will retire is uncertain. Half of boomers who live in an urban area would like to retire in a small town or rural area. Their ideal retirement location characteristics include a lower cost of living, being near family, quality health care, better climate and being near a body of water.

More than a third of all baby boomers want to retire in an urban or suburban setting, motivated by quality health care and cultural activities. Half of boomers said they would consider living in an age-restricted community.

Almost one in four boomer households have a high net worth of $500,000 or more, and this ratio is expected to increase in the future as the generation ages. Virtually all high-net-worth households are homeowners (97 percent), and 47 percent are likely to also own other real estate in addition to their primary residence. More than a third expect to help children or grandchildren with a downpayment on a home. Wealthier boomers want amenities where they retire, including cultural activities such as museums and art galleries. As a result, they are more likely to retire in an urban area or city.

Although most boomers are married couples and 27 percent have children under the age of 18, nearly two out of five baby boom households are nontraditional households, most of which are headed by women.

This changing demographic raises interesting ideas. Nontraditional households may have different needs and desires about where they want to live. Twenty percent of boomer households are headed by women, but because women aged 60 to 69 account for a quarter of homeowners in that age group, the number of women boomer homeowners is likely to increase much faster than average as they age.

For boomers with children, neighborhood schools are of obvious concern, but for those without children or grown children (3 out of 4), security may be a bigger issue.

In a similar study by the Mortgage Bankers Association, it was found that 43 million households headed by someone age 50 or older were owned as a main residence, and 6.6 million age 50 or older own a second home. The rate of second home ownership among boomers was flat between the years of 1992 and 2004, and only 12 percent of respondents said they intended to sell their main home and use their second home as a primary address. Even so, the MBA predicts that baby boomers will add 2 million second homes to their portfolios.

The good news for the real estate industry is that one out of four baby boomers between the ages of 50 and 60 intend to buy some form of real estate within the next 12 months; and the percentage jumps to 37 percent among the same age group with incomes at $100,000 or above.

But don't necessarily look for boomers to buy the most expensive homes. As they eye retirement, they are also considering affordability. Already 67 percent of those age 50 to 60 worry that housing costs could spiral beyond their reach.

Editor's note: The study can be ordered by calling 800/874-6500, or online. The cost is $50 for NAR members and $125 for nonmembers.

Published: October 30, 2006

by Blanche Evans

Realty Times

2006-10-27T20:15:00.000-07:00

U.S. HOME PRICES MAY FALL BUT DROPS WILL BE MILD

U.S. housing prices may decline "a little" within the next year, but any such drop is likely to be mild and inconsistent with a bursting housing bubble, according to a paper written by a Federal Reserve economist.

Based on an analysis of housing futures and options and derivatives of housing-related company shares, "market participants expect home prices to decelerate sharply or actually decline a little within the next year," wrote J. Benson Durham, an economist with the Fed's monetary affairs division. However, the anticipated drop in prices "is mild compared to some estimates of the purported overvaluation of the housing market," he added. The paper, dated September, was posted on the Fed's Web site Thursday.

Mr. Durham cautioned that deep and liquid markets needed to signal future home-price trends don't fully exist and that housing futures and options have only been trading on the Chicago Mercantile Exchange since May 22. Still, implied volatility on CME housing options are greater than the historical average, "which suggests that investors see more risks to home prices going forward," he wrote. That higher uncertainty, however, is "generally inconsistent with the perception of a "bubble,'" he added.

Mr. Durham also examined options on shares of certain homebuilders to gauge whether investors see upside or downside risks to home prices. Those options "are only marginally negatively skewed at the present time," he wrote. "This suggests that market participants do not, in fact, view the risks to home prices or, perhaps more accurately, to the broader housing sector as especially tilted to the downside," Mr. Durham concluded.

The paper's conclusions seem in line with the thinking of Fed officials that the sector will slow substantially through the rest of 2006 and into 2007 but is unlikely to derail the economic expansion.

In the minutes of the Sept. 20 Federal Open Market Committee meeting, the Fed said housing "seemed to be cooling considerably" but that the overall economy should strengthen next year "as the housing correction abated." Officials also continue to remark that higher inflation poses a greater risk than a slower economy.

Housing data had declined markedly in recent months, raising fears of a housing-induced slowdown severe enough that it would eventually require Fed rate cuts. But there have been tentative signs of stabilization of late. The National Association of Home Builders index rose in October, albeit by only one point, but nevertheless breaking a string of eight straight declines. And housing starts unexpectedly rose in September, breaking a string of three straight declines.

-- October 23, 2006

By Brian Blackstone

The Wall Street Journal Online

2006-10-27T20:07:00.000-07:00

HOW MUCH IS TOO MUCH TO FIX UP YOUR HOUSE

As with any resale product, the person trying to sell said product will usually try to make the product look as new as possible to ensure the highest profit available. In reviewing many of the homes on the market today, however, some sellers don't get that notion.

Don't make the mistake of the seller who, knowing full well that buyers were coming by, not only failed to do a fresh clean up, but also left his underwear on the exercise bike, a pan of crusty macaroni and cheese on the stove and debris throughout the yard.

There are some task items any seller should consider when selling a house. Even if you decide to sell "as is," a little soap and water could put a few more bucks in your pocket. With that in mind, let's look at what sellers should look at doing with any house they want to put on the market; what to do when you want to get a little more money; and how to compete with the Joneses when looking to prepare your home for sale.

Any House

Next, declutter the house. Go ahead and rent a huge storage unit and fill it up. Plan this with a bunch of pre-made boxes that have lids you can tape shut and label. Take extra kid's toys to charity. Donate all clothes that are even a bit too tight or out of date. Remove excess furniture (or even cover with matching covers).
Repair and paint where needed. As with most homes that have been lived in, that would be all of them. Walk through a new construction home to see what you're up against and then go and make yours look as best you can on your budget.
Landscaping. Thankfully, mulch and flowering plants don't really cost a lot of money for those who are just sprucing up. Before going out and paying for a designer-created landscaping job, start with the local garden center and get some free advice on how to spruce up on a budget. Fresh, flowering plants (even in fall and winter) can make the house look oh-so much better.

Even if you're selling as-is, the above four tips are a must. Next is where we spend a little more money.

Redecorating

Renewed color. Giving your house a makeover doesn't have to cost you a second mortgage. The first item to consider for rehab is your color selection. While the traditional advice is "go vanilla," professionally selected colors (not too bold) can make a "nice" house into a "wow" house.
Flooring is one of the best moderately priced upgrades a seller can install to make a huge difference. While I like the concept of "choose-your-own-carpet" offers in home listings, think about what else it's saying: "We're too cheap to fix up the house now, so we'll let you walk through our tattered, stained carpeting and let you get it installed the weekend after we leave." Like I said, make your house a "wow" by making that first great impression with new carpet.
Replacing dated items. Sometimes replacing certain items in the house is really more like maintaining your home instead of upgrading it. Items like windows, doors, light fixtures, faucets, door hardware, etc., need upgrading and replacing periodically. A walk down the light aisle at your favorite hardware store reveals this could be done on a budget. Nevertheless, there's nothing more gross looking than a brass light fixture that's chipping and rusting.

Keeping up with the Joneses

At some point you have to look at what the neighbors are doing and keep up or you'll lose out. If everyone in the neighborhood is ripping out the old and installing the new (kitchen, bath, carpet, doors, etc.) then you may be forced to do the same thing long before you're thinking of putting your home on the market. My wife and I are facing that right now with the kitchen. It's starting to show its age, which means before we put the house on the market in a few years, if I want the best buyer (or any buyer for that matter) the kitchen cabinets need an upgrade.

Redo, Remodel, Relax

As you look around the house, making your list of things to change before putting the house on the market, remember to create some time to enjoy your new digs before selling the place. If a sale is on your horizon and you must redo the landscaping before putting the house on the market -- do it early so you can drive home to the professionally designed flowerbeds and floral creations a few months or years before selling it to someone else.

While you want to repair, paint, remodel and add on to your house because it adds value to your home, every homeowner should especially do it because they want to enjoy the changes as well.

Published: October 20, 2006

By M. Anthony Carr

Realty Times

2006-10-25T08:29:00.000-07:00

MULTIPLE HOMES STILL IN VOGUE AMONG AFFLUENT

High earners expect to purchase more properties in next few years

Tuesday, October 24, 2006

Second, third and fourth homes are still in vogue for affluent homeowners who participated in a study by Sotheby's International Realty and Architectural Digest.

Thirty-six percent of Architectural Digest subscribers said they plan to buy an additional home in the next two years, and of those who already own three or more homes, 49 percent plan to purchase another home within two years.

Of those who already own a second home, 35 percent said they plan to buy a third home within two years.

Second homes also appear popular with younger owners -- 44 percent of survey respondents under age 45 said they may acquire a second home in the near future.

Geography is the primary driver when searching for a second home, according to the survey, but lifestyle amenities are becoming increasingly critical. About 32 percent of the participants know what amenities and characteristics they are looking for and would search in a number of locations to find what they want. Those with household incomes under $400,000 are more likely than their wealthier counterparts to indicate they would search in a number of locations to find the house that meets their amenity checklist.

What do these buyers want? The study found that waterfront property is the most sought-after amenity when buying a second home, with 75 percent of respondents choosing that characteristic. Proximity to golf courses and aquatic activities, and in-home fitness centers and media rooms/home theaters were also high on the list. Pools and large backyards were the least chosen amenities.

Regional differences were found mostly among respondents from New York and California, the survey found. New York metro-area participants are most drawn to waterfront or oceanfront properties, while Californians found this of less interest.

Also, Californians tend to be less interested in golf courses than other respondents and more drawn to in-home fitness centers.

New York-area metro participants are least interested in ski slopes, while Californians are most likely to search for proximity to the slopes.

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By Inman News

2006-10-24T15:28:00.000-07:00

U.S. HOME PRICES MAY FALL BUT DROPS WILL BE MILD

-- October 23, 2006

By Brian Blackstone

The Wall Street Journal Online

2006-10-21T21:21:00.000-07:00

WHICH DRINKING WATER IS BEST FOR YOUR FAMILY?

You have the new home, the new community, the new school district. Your home has all of the newest bells and whistles. But does the most basic of human needs meet high standards?

Water quality is not uniform in the United States. Drinking water quality is dependant on safe sources, competent processing, and ongoing monitoring by regulator, and out of those dependencies, you essentially have three drinking water choices. You can install a well on your property. You can use tap water from a local water company. Or you can rely on bottled water. Not all choices are equally available everywhere.

Let's start with well water. It may be a good option if you can install a well that produces healthy water. However, will you monitor it often enough to make sure that it does not become contaminated? Many people do not monitor enough. And you need to understand that a person with well water depends not only on his or her own on site activity to preserve water quality, but on activity of neighbors as well. And that might not be easy to regulate.

If public tap water is available, that might provide you with an option. The benefit of tap water is that in many places you are going to receive a product that is administered by professionals. There are water quality engineers who on a regular basis will be evaluating the treatment of the water that your family is drinking, the quality of the distribution system, and ultimately the quality of the end product.

The federal EPA has strict standards that are applicable to water from the tap. If water providers fail to meet certain quality standards, they can be fined and in rare instances, even have criminal penalty exposure.

Every year, many public water providers in the United States are required to provide reports relating to the quality of the water. If you want to know how good or bad your water is, you can ask your water provider for the most recent report. Most of this information is also available online.

The interesting thing about these reports is that they are intended to instill public confidence. However, in many instances if you review the report you will find that while the water quality may be legally acceptable, sometimes it is just barely legally acceptable.

For example, you might find that there are very high levels of pesticides in the water. Perhaps they are still within the "safe" range, but the levels may be high and persistent. You might also find that there are bacteria or microbe problems associated with the water.

In these instances, the question you have to ask yourself is whether you are satisfied with water that just barely meets safe levels. Personally, I would rather not have any pesticides in my tap water. I would run rather not have a high level of bacteria in my water. And I would rather not have any microscopic organisms in my water that can make me ill.

Keep in mind that some contaminant levels are normal, safe and acceptable. The question might be whether levels that approach the high end of a range considered to be "safe" are acceptable to you and your family. That is a personal choice that you have to make.

The next option is bottled water. There are people who seem to think that bottled water is always better than tap water. That is obviously not true. Some tap water is very good. Some bottled water is very good.

Bottled water and tap water actually are very similar in that the quality of the product is dependent on the source of the water and subsequent processing. If the water comes from a well that is in a highly industrial or agricultural area, the water might be negatively impacted. Wells can be installed to protect the water inside them, but that is not always fail safe. Mistakes happen and human error happens as well.

Bottled water companies often treat their water before selling it to the public. There are various kinds of treatment mechanisms that are available. In the end, the bottled water providers are supposed to provide you with a quality of water that more or less is the same as the quality set by the EPA for tap water.

There are some people who drink bottled water exclusively and rotate the manufacturers. In a way I think that might be a good idea. This way, even if one product is deficient on one occasion, it can be offset with water from other providers and other sources.

Finally, if you are going to rely on tap water, you might decide to engage in home filtering. According to some estimates, over 40 percent of American households treat their drinking water in one manner or another. Treatment ranges from simple pitchers that cost under $20 to sophisticated systems that can cost hundreds of dollars.

Water filtration systems can improve the taste of water. For some people, that is all that they're looking for. Other persons use filtration systems because they have health concerns.

Water filtration pitchers are inexpensive. They can help with taste and some, but not necessarily all, contaminant removal. Filters must be changed as directed.

Another kind of filtration system consists of filters that are attached to faucets installed under the sink. These filters generally rely on the same kind of technology as pitcher filtration systems.

Reverse osmosis systems force water through membranes under pressure leaving contaminants behind. They are very effective for many contaminants .

More sophisticated systems are also available. Some systems work better in treating some pollutants than others. Which means you really need to understand what is you are drinking before you purchase a filtering system.

Persons with compromised immune systems may have special concerns that impact upon the correct filtration choice. Their doctors should help them make these decisions.

In conclusion, there are numerous drinking water alternatives. Which one is appropriate for your family? It depends on the quality of the local water supply, your required level of safety, and your budgetary concerns.

There are experts in water treatment who are available to guide you through the process. Local regulators may also be able to provide guidance.

Published: October 12, 2006

By Stuart Lieberman
Realty Times

2006-10-18T07:34:00.000-07:00

RELOCATING TO CHEAPER HOUSING DOESN'T ALWAYS CUT COSTS

Moving to an area with lower housing costs often doesn't pay off for low-income Americans, according to a study to be released today by the Center for Housing Policy, a nonprofit research group based in Washington.

The study, which looks at families with low to moderate incomes in 28 metropolitan areas, found that transportation costs in places with cheaper housing are often so high that they wipe out the savings from lower rent or mortgage payments. Such places tend to be farther from employers or short on public transportation, which makes commuting costlier.

The study found that housing and transportation costs combined eat up an average of 57% of annual income for "working" families, which the study defines as those with incomes of $20,000 to $50,000 a year. The combined costs ranged from 54% of income in Pittsburgh to 63% in San Francisco; in 25 of the 28 metro areas, the combined total was within three percentage points of the 57

The findings contradict the common notion that many people would be better off financially if they moved from areas with high housing costs, such as California, to states like Texas or Georgia, where housing is much cheaper.

The median house price in San Diego, at $613,000, is four times that of Dallas. But the study found that working families in San Diego spend 59% of their income on housing and transportation, only slightly more than the 57% they spend in Dallas. Families in Dallas spent just 26% of their income on housing, compared with 31% in San Diego, but the Dallas families spent more on transport.

The study also found that moving to an inexpensive outer suburb, but continuing to work near a city center, often backfires. Typically, a move that adds more than about 12 miles to a one-way commute will result in a rise in transport costs that outweighs the savings on housing, the researchers found.

The data on housing and transport costs for working families come from the 2000 U.S. Census. Since then, both housing and transport costs have jumped, but Barbara J. Lipman, research director at the Center for Housing Policy, said the results are still valid. Housing and transport costs have grown by roughly similar amounts.

The center is an arm of the National Housing Conference, a nonprofit group that favors more spending on affordable-housing programs for low- and moderate-income people. The conference is funded by groups including the MacArthur Foundation and mortgage-finance companies Fannie Mae and Freddie Mac.

-- October 12, 2006

By James R. Hagerty

Wall Street Journal Online

2006-10-16T13:21:00.000-07:00

MORTGAGE RATE "BUYDOWNS" CAN SELL HOUSES IN SLOW MARKETS

To help move at least some of the unsold houses glutting local markets, lenders are beginning to look "back to the future" for financing techniques that worked in the tough times of the 1980s.

One creative technique is known as a mortgage rate "buydown." Rather than lower the asking price on a house by thousands of dollars, a seller can offer a discounted rate package that lowers' purchasers' effective interest costs and monthly payments during the early years of their loans.

The most popular form of buydown in the 1980s was a "3-2-1" on a fixed rate 30 year mortgage. During year one of the new purchaser's mortgage, the seller agrees to pay 3 percentage points of the interest rate on the mortgage note. During the second year, the sellers pays 2 percent, and in year three the seller pays 1 percent. After that, the purchasers pay the full note rate.

To see how this works in practice, and why it can be a triple win -- for the seller, buyer and the realty agent -- consider this example. Say a seller has had her house on the market for months at $210,000 with no serious offers. She could cut the asking price, say to $200,000, to stimulate some bids. Or, more creatively, she could advertise a "3-2-1" buydown -- essentially subsidizing any qualified purchaser's mortgage payments during the first three years.

Here's how it would work, according to an active proponent, Joseph Lipes, president of Connecticut-based Family Choice Mortgage Corp., who ran the numbers for Realty Times. The sale would be for $210,000, not $200,000. Assume the going 30-year fixed mortgage rate is 6.5 percent. The purchaser applies for a 95 percent ($200,000) mortgage.

In year one, the purchaser's 6.5 percent rate would be subsidized down to 3.5 percent by the seller, creating a monthly payment of $898.09 for the purchaser, instead of the full $1,264.14 principal and interest. The seller's outlay for the subsidy would come to $366.05 a month, or $4,392.56 for the full year.

In year two, the purchaser would be paying at a 4.5 percent rate or $1,013.37 a month. The seller's contribution would be $250.77 per month or $3,009.20 over 12 months.

In the third year, the purchaser would be paying at a 5.5 percent rate, or $1,135.58. The seller would contribute $128.14 a month for a total of $1,542 for the year.

During the course of the three years, the home seller would pay a total of $8,999.44 in rate subsidies, according to Lipes. "So rather than have the sellers lower their sales price from $210,000 to $200,00" -- which might not strike potential purchasers as all that interesting -- "the sellers keep their price at $210,000 and pay $8,944.44 for the three year buydown," a savings of more than $1,000.

"As long as the house appraises for $210,000, it's a win" for the seller, the buyer, and even the realty agent who's commission will be slightly higher because of the higher sale price. Even more important for the Realtor: the house gets sold, in part because the buydown concept can be very attractive to certain purchasers, especially those with tight budgets that will be stretched in the first several years paying for new furniture, appliances and the like.

Lipes points out that Fannie Mae guidelines permit purchasers to qualify for the mortgage at the "bought-down" rate -- 3.5 percent in this case -- provided it's a primary residence and the purchaser has a 660 FICO score minimum (680 for self-employed individuals.) On sales of second homes or investment properties, the rule requires qualification at the full note rate.

Lipes says, "Buydowns have no hidden pitfalls such as negative amortization loans, payment-shock ARMs or others." It's all straightforward, easy to understand, and most important of all in sluggish markets: It's a novel approach in the eyes of many potential buyers today, and it really works.

Published: October 9, 2006

By Kenneth R. Harney

Realty Times

Lower Heating Bills This Season?

2006-10-11T04:31:00.000-07:00

Over the past five years, consumers have seen a steady increase in winter heating costs. That may be about to change. According to the American Gas Association, the recent drop in the price of natural gas is likely to help soften this winter’s consumer heating bills.

A drop of as much as 10% from last year’s bills is possible, but the American Gas Association cautions that consumers using natural gas shouldn’t anticipate a large reduction in their utility bills. Approximately 68 million American homes, or 52% of households, use natural gas to heat their homes.

“Bills will be lower if the weather is the same as last year but weather is never the same,” said Paul Wilkinson, vice president for policy analysis at the American Gas Association. “We’ve been on a price roller coaster for six years now,” he said.

The lack of hurricanes in the oil-producing regions of the US this year are also likely to benefit customers, however a winter cold snap that causes higher demand will be the principal factor in determining winter heating bills during the heating season.

“This year, the industry has repaired much of the damage to its infrastructure and wholesale prices are lower, but the weather is a wild card,” the American Gas Association said.

Consumers generally feel that any reduction is a good reduction as all eyes are cast on Mother Nature.

Baby Boomers Influence The Market

2006-10-09T13:36:00.000-07:00

Wanting different things from your home as you grow older is becoming a trend. Baby boomers are turning 60, heading for retirement and longing for their homes to be more of an expression of them and less of the functional family raising properties they once were.

Bucking the trend their parents set by remaining in the same homes they raised their children in, 80% of today’s boomers want a different lifestyle and a different property to match it.

“This generation wants upscale living with less complication. They want their homes to be manageable, temperate, affordable, flexible and accessible,” Tom Flynn, president of Hanely Wood Market Intelligence, a media and information company for the housing and construction industry, said in a news release.

Baby boomers’ opinions matter because they have such an influence on housing trends. “Baby boomers have determined the course of the housing market for the last 30, 35 years,” Frank Anton, chief executive officer of Hanley Wood said.

“In the ‘70s, they were kids coming out of college. They weren’t ready to buy a house, they rented apartments. There was this huge building boom in the rental apartment market.

In the late ‘70s and early ‘80s, they started to turn 30 and get married. They bought their first house, so you had a big wave of builders building relatively small, relatively inexpensive homes.

During the 1980s through about 2000, this population segment became older and more affluent, and started to buy bigger houses, termed by many as ‘McMansions’. The trend of remodeling and buying second residences has reigned for the past 10 years”, he said.

2006-09-29T15:04:00.000-07:00

NEW OPTION FOR RATE-WRACKED CREDIT LINE BORROWERS:
ZERO COST CONVERSIONS

When the Federal Reserve decided to leave short-term interest rates unchanged last Wednesday, consumers with floating-rate home equity lines avoided a pinprick of pain they've gotten used to: Steadily higher monthly payments on their outstanding balances in the wake of 17 Federal Reserve rate bumps.

The average home equity credit line now carries an interest rate close to the bank prime -- 8.25 percent, according to new survey data from the Consumer Bankers Association. Many equity line borrowers have seen their rates nearly double in the past two years, leading large numbers of them to simply bail out of their floating-rate notes.

Some consumers have managed to pay off their balances by doing cash-out refinancings, essentially moving their floating-rate debt onto a new first mortgage at a fixed rate. But cash-out refis usually mean replacing a low-rate first mortgage with a larger first carrying a higher interest rate.

But major home equity lenders are now offering another alternative: Don't throw away that precious 5.50 or 5.75 percent first mortgage that you got during the refi boom years of 2003 and 2004. Keep it intact and convert your floating-rate credit line into one or more "baskets" or sub-accounts with attractive fixed rates at zero cost. It's the hottest, but least known, trend underway in the home equity field, say bankers.

Annapolis, Maryland homeowner Andy Hallmark accidentally bumped into the trend recently when monthly costs on his $70,000 floating-rate credit line got uncomfortably high. He and his wife assumed they'd have to bail out of the line and refinance their first mortgage.

But before doing that, the Hallmarks decided to try something different. They called up their lender and asked an improbable question: Could we possibly transform our credit line into a fixed-rate note and get some peace of mind about future rate increases?

"We were totally shocked," said Hallmark, "when (the bank) said 'sure, no problem.' We had figured there was no way they would let us do it."

Not only did the bank say yes, it also said there'd be no fees, no closing costs, and the new fixed rate would be in the mid-7 percent range, well below the bank's floating rate of 8.25 percent.

The Hallmarks' discovery could have been duplicated at other large home equity lenders. According to banking industry experts, lenders have had to scramble to change their multi-trillion dollar products to avoid mass payoffs of balances triggered by rising short-term rates. Most home equity lines are tied to prime -- typically anywhere from prime plus one percent to prime minus one quarter or one-half percent.

Rather than lose customers in droves, major banks like JPMorgan Chase, Citibank, Wachovia and Wells Fargo now offer zero-cost conversion plans turning floating-rate credit lines into fixed-rate second mortgages.

Citibank and Chase offer another twist: You can chop your credit line balance into as many as five sub-accounts or "baskets" with different terms and rates, at no cost anytime you want.

"It really turns your line of credit in a one-stop-shop financial instrument," says Brad Conner, president of Chase Home Equity. For example, say you've got a $100,000 credit line at 8.25 percent and you're planning a home improvement project and are concerned about future rate increases. You could lock the rate on $50,000 of the $100,000 at a favorable fixed rate for 10 years. The bank would charge you zero to do the transaction. A year later, you might want to fix another $30,000 for a five-year term to buy a boat. The remaining $30,000 you might reserve for a floating-rate "basket" just in case rates drop or you need quick cash.

Published: September 25, 2006

By Kenneth R. Harney

Realty Times

2006-09-27T20:38:00.000-07:00

LIFESTYLE CHOICES AFFECT BOTTOM LINE

When it comes to eventually moving into that dream home you've always wanted, keep in mind that many of the choices we make on a house are really driven by lifestyle desires, rather than lifestyle needs.

More bedrooms means more time to clean, more expensive to repaint and carpet/floor in the future. The bigger the house and the larger the lot, the more you're going to pay for it both in time and financial resources. The main three decision factors are larger lot, more space and more stuff. Each of these come with a price tag.

Larger Lot:

Depending on the acreage, this is going to cost the owner in regards to acquisition, monthly payment, and upkeep. First is the acquisition. Larger lot means larger price, thus larger down payment and monthly payment. In metropolitan areas, the closer in to the epicenter of town, the more the extra space is going to cost you. If you decide to get it cheaper by moving out of town, then you'll be paying more for gas and be losing the ever elusive minutes of your life.

A friend of mine is dying for a couple of acres. He's moving into the area from a community where houses with 2 acres are common and they are within minutes of the job centers. No problem. In this market, however, it means possibly driving 30 miles or more for what he's looking for. It also means a longer commute -- upwards to 90 minutes -- in morning and evening rush hour. If that's 30 minutes longer per day than what he does now, that's 2.5 hours per week longer on the road -- folks that's 125 hours per year just on the road to work and back per year -- MORE -- than living closer in. (That's three weeks worth of working hours.)

The larger lot also means more upkeep. If you have teenagers, maybe it's not your problem, you think with a wry grin. Nevertheless, the larger lot that is cleared off and landscaped will take longer to mow, require more gas and possibly even more equipment. In addition, there's the landscaping (mulch, et. al.) that you may not have needed to fret about before.

(In my household, come mulch time, forget bags -- we order it by the truckload now. We didn't even get a larger lot; just decided to "add" a few flower beds -- now each spring costs more for mulch.)

Even in a wooded lot, you'll now have to start watching the trees that border your house. A neighbor told me before he was moving that he was spending about $500 per year taking down trees that were threatening his house. Once he did move, the new owners had a tree fall on their home within a few weeks, causing damage to the roof and patio.

More space:

For most move up buyers, this is the No. 1 reason they are shopping for a home. The 3-bedroom townhouse isn't cutting it for the growing family and it's time for a yard. Let's get the 4th bedroom, or 4th bedroom with a "bonus" room in the basement.

More space creates more expenses for paint, accessories, flooring, etc., every time the room is repainted, remodeled, etc. It's no rocket science calculation to see that the 1,800 square foot home is going to be cheaper to care for than the 2,800 square foot home. Remember, percentage wise, we're talking 55 percent more home – which will interpret into 55 percent more flooring cost, 55 percent more paint, 55 percent more utilities, etc. When purchasing, don't forget to ask the owner for a rundown of monthly or annual expenses for upkeep of the property. (Most likely, it will be an estimate, but a good indicator of your true costs of the property.)

More stuff:

Don't forget that once you get a larger place, it usually is compounded with a decision to replace older furnishings or purchase new furnishings to put into your new areas. Movecentral.com's latest home moving survey revealed that:

57 percent of owners and 37 percent of renters bought furniture within the 12 weeks surrounding their move; owners spent an average of $3,500 and renters spent $1,220.

55 percent of moving homeowners purchase at least one appliance when they move, and 57 percent of homeowners buy furniture.

35 percent of owners and 40 percent of renters bought bedding; of these individuals, 72 percent did so within three after their move. Owners spent an average of $420 and renters $240.

As you're contemplating your next move, be sure to add in to all your calculations the new costs of living in your new castle.

Published: September 22, 2006

By M. Anthony Carr

Realty Times

2006-09-25T20:03:00.000-07:00

FEDERAL NATIONAL DISASTER POLICY NEEDS TO BE ENACTED PROMPTLY

WASHINGTON (September 18, 2006) –Representatives of the housing and insurance industries, along with members of Congress and key congressional staff, are urging Congress to act quickly to enact comprehensive federal national natural disaster legislation.

The National Association of Realtors® hosted the Federal Natural Disaster Policy Symposium today to help identify appropriate federal policies for dealing with a potential crisis. Attending were 100 people from a wide variety of associations, nongovernmental organizations, congressional offices and federal agencies. NAR has been actively lobbying Congress on the urgent need to protect homeowners and the economy by ensuring the availability and affordability of disaster insurance, especially in disaster-prone areas.

Cynthia Shelton, NAR Commercial and Business Specialties Group liaison and a Realtor® with Northstar Brokerage Services in Orlando, Fla., moderated the meeting. She noted that natural disasters are not only a concern to a few select states. “Natural disasters come in many forms and affect many different areas of the country,” said Shelton. “Beyond hurricanes and floods, earthquakes, tornadoes, wild fires and ice storms can cause significant damage and can result in catastrophic costs.”
“Whatever the event and wherever it may occur, we must prepare now. Absent a comprehensive federal policy to plan for, mitigate the effects of, and recover from natural disasters, the American taxpayer—whether in an affected area or not—will pay the price,” Shelton said.

Keynote speaker Kevin McCarty, Commissioner of the Office of Insurance Regulation for the State of Florida, said, “If I leave you with one message today it is this: Natural catastrophes are a national problem that requires a national solution.” McCarty noted that Hurricane Katrina highlighted many of the pitfalls in today’s insurance structure. “State resources are not sufficient to handle mega-catastrophes; we must engage in planning before a disaster; and we are confronting an economic problem, not an insurance problem,” said McCarty.

McCarty said that when a catastrophe hits it affects far more than insurance companies and the victims of these events. “It places stress on the homebuilders market, the banking market, land development markets, real estate values, community tax bases, unemployment rates, and ultimately affects the economic security of all Americans,” said McCarty.
Other participants at today’s symposium included L. James Valverde, vice president, economic and risk management at the Insurance Information Institute; Chris Wilson, managing partner at First Choice; Mitchell Glassman, from the Federal Deposit Insurance Corp.; Mike Grimm from FEMA; and a host of congressional staff representatives.

Recent research conducted by NAR in Florida concluded that the lack of affordable or available homeowner’s insurance in that state contributed to the slowdown in Florida real estate, impacting the overall economic activity in the region. In earlier congressional testimony, NAR stated that a strong real estate market is a linchpin of a healthy economy, generating jobs, wages, tax revenues and a demand for goods and services. To maintain a strong economic climate, the vitality of residential and commercial real estate must be safeguarded, NAR said. NAR, as America’s leading advocate for homeownership, affordable housing and private property rights, is committed to ensuring a strong and secure housing market.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.
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Article Offered by the NAR

2006-09-20T14:06:00.000-07:00

YOUNGER HOME BUYERS SHOWING AN INCREASED INFLUENCE IN REAL ESTATE MARKETS, SAYS NAR

WASHINGTON (September 15, 2006) – As they begin to enter the housing market, many consumers in their 20s are more likely to buy a home at a younger age than their older brothers and sisters as well as their baby boomer parents, and are not necessarily waiting for marriage or even a long-term relationship before becoming homeowners.

“The next generation of homeowners is beginning to exert its influence on the housing market,” said Thomas M. Stevens, National Association of Realtors president from Vienna, Va., and senior vice president of NRT Inc. “Many younger buyers have seen the wealth-building effects of homeownership in their parents and understand the value of housing as a good long-term investment.”

The motivations, interests, and home buying approach of some younger buyers are chronicled in “Tomorrow’s Buyers: Who They Are and What They Want” in the September 2006 issue of REALTOR Magazine. The report integrates NAR research with the experiences and attitudes of real-life buyers who represent different demographic populations, putting a human face on statistical trends.

The percentage of first-time homebuyers under age 25 has been increasing in response to historically low interest rates and continued confidence in the long-term housing market, from 11 percent in 2001 to 14 percent in 2005, according to the 2005 NAR Profile of Home Buyers and Sellers. “Owning a home is no more burdensome than renting, and in the long term, it’s the better investment,” said Kristen Carreira, a 26-year-old homeowner in Pittsburgh.

Carreira is also part of a trend in single female home buyers. While married couples are still the norm, they represent a smaller share of the home buying public than they did just 10 years ago, from 70 percent of home buyers in 1995 to 61 percent today, says NAR. During that same time, the proportion of single women buying homes has increased, from 14 percent in 1995 to 21 percent today.

Younger buyers are also likely to use technology and the Internet in their home buying search. In 2005, according to NAR research, the median age of buyers who used the Internet to search for homes was 11 years younger than those who did not, at 38 and 49, respectively.

“Realtors have adapted to meet the needs of this growing population of young home buyers,” said Stevens. “More than one-third of NAR’s 1.3 million Realtor members have had special training and lots of experience in buyer representation and technology. That expertise is reflected in special designations and certifications, such as the Accredited Buyer Representative (ABR) designation and e-PRO certification. A commitment to understanding the demands of this changing marketplace is just one more way Realtors add value to the real estate transaction.”

The National Association of Realtors, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.

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Article offered by the NAR

2006-09-18T11:25:00.000-07:00

FALLING OIL PRICES BRING DOWN MORTGAGE RATES

Inflation outlook improves

Long-term interest rates are sitting on a six-month low, the 10-year T-note at 4.75 percent and low-fee 30-year mortgages at 6.5 percent. The reasons that these rates are so low are not the widely advertised pre-recession or housing collapse.

The biggest recent help to long rates is the authentic collapse in commodity prices: oil is $62.70 this morning, natural gas $4.85 (10 bucks below last winter), wholesale gasoline $1.53 (which should put retail at $2.20 or less within two months), and gold is in freefall at $573 (down from $730 in May).

Aside from improving the inflation outlook, the big drop in energy costs will relieve household budgets. As is, consumption has not faltered much: August retail sales were forecast to decline and instead rose.

Probably the largest force pushing down on long-term rates is the solution to the Greenspan Conundrum. Federal Reserve Chair Ben Bernanke has been correct: a global savings glut is the only sensible reason for long-term Treasurys to be trading .5 percent below the Fed's cost of money, and with no spread to inflation. Unless we see an actual economic stumble, today's yield curve inversion is as false a recession signal as last winter's.

Housing is slowing, no question, its past stimulus fading to nil, but housing trouble will not exert drag unless waves of foreclosures result in a price spiral. The newest foreclosure and loan-delinquency data do not support the scare headlines, and there is widespread misunderstanding about the process of a housing slowdown.

RealtyTrac, which lately has gotten most of the ink, shouted this week that the number of homes in any stage of foreclosure had jumped 24 percent from July and 53 percent from last year.

Hang on to your door handle. Foreclosure.com, tracking only completed foreclosures, says foreclosures fell 6.7 percent in August, only 7.3 percent higher than last year.

Who is right -- or most descriptive? The Mortgage Bankers Association's study of 42 million loans confirms Foreclosure.com's picture: current-quarter delinquent payments and foreclosures are unchanged from last spring. To understand why a rapid slowdown is sales is not causing widespread distress, it's necessary to think through the mechanics of a slowing housing market.

At the end of a boom, for-sale signs blooming like dandelions, sellers still assume a continuation of prior appreciation and set their prices well above the last sales. The first wave of "price declines" is a reduction in expectation, not in actual prior-price-paid value, and it often takes a year or more to squash those expectations.

True declines in price follow. It is perfectly normal for those who bought in the last year of a boom, just before the forest of signs, not to be able to sell at the price they paid, markets going negative 5 percent to 10 percent cumulative over the next few years.

No great harm ensues (except to the unluckiest families, and the ones who bought with the smallest down payments) because all of the people who bought before the last-year price pop feel no pain but psychological. If my Miami condo rose 137 percent since 2001 (www.ofheo.gov), is it a disaster to lose 10 percent in 2007, or to take a while to sell in 2008 or 2010? Cumulative appreciation is the reason for the divergence between foreclosures in process and completed ones: if you have a bunch of equity, you can sell or maneuver your way out of foreclosure.

Here in Colorado, our housing boom coincided with the technology boom, '98-'01, and prices have been largely flat since. It took three years of flat prices before our foreclosure problem appeared: as always (except for times of big job losses), it takes a while for flat prices to expose the over-leveraged households.

Even now, the leading cause of our foreclosures is a spurt of idiotic subdivision of land in four counties north and east of Denver. Never underestimate old-fashioned roads to perdition.

--September 15, 2006

Lou Barnes is a mortgage broker and nationally syndicated columnist based in Boulder, Colo. He can be reached at lbarnes@boulderwest.com.

***

By Lou Barnes

Inman News

2006-09-15T16:02:00.000-07:00

FORECLOSURE FIGURES SUGGEST HOMEOWNERS IN FOR ROCKY RIDE

By any measure, things are getting tougher for American homeowners.

Online foreclosure-data service RealtyTrac of Irvine, Calif., said yesterday 115,292 properties nationwide entered some stage of foreclosure last month, a rise of 24% from July and nearly a 53% increase from a year earlier.

Also yesterday, Foreclosure.com of Boca Raton, Fla., which also tracks foreclosures nationwide, said new residential foreclosures fell by 6.7% in August from July to 26,255 nationwide. The company's figures, however, show that foreclosures are up 7.3% compared to August 2005.

The divergent results can be explained by the way each company counts foreclosed properties. RealtyTrac data includes properties in the early stages of a foreclosure proceeding, even before the bank actually owns those properties. About 60% of these get remedied or the properties are sold before they get to the auction stage, said Rick Sharga, vice president of marketing for RealtyTrac.

A spokesman for Foreclosure.com said it only reports properties officially foreclosed and in the hands of the banks.

The trend is supported by data collected by the Mortgage Bankers Association, which reports the number of U.S. households late on mortgage payments fell slightly in the second quarter, but that a modest rise in delinquency and foreclosures is expected going forward.

The delinquency rate for residential mortgages was 4.39% in the April-June period, down from 4.41% in the previous three months, the MBA said in a survey that included 42.5 million loans. Home mortgages in foreclosure made up 0.99% of total mortgages at the end of the quarter, up from 0.98% three months earlier.

The MBA expects further cooling in the economy and the housing market, which in turn could lead to "modest increases in delinquency and foreclosure rates in the quarters ahead," said Douglas Duncan, MBA's chief economist and senior vice president of research and business development.

RealtyTrac Chief Executive James J. Saccacio noted that billions of dollars of adjustable-rate mortgages that have benefited from a stable fixed rate of interest over the past two years are due to shift to higher floating rates in coming months.

"With home-price appreciation continuing to decelerate," he said, August's "increase could be the beginning of an upward shift in the foreclosures market."

Foreclosure.com President and CEO Brad Geisen said while the company has continued to see fluctuations in month-to-month data, "as we near the end of the third quarter, most housing and economic indicators point to a sustained period of increased new foreclosure activity across the country."

Foreclosure.com noted that the West was becoming "an emerging foreclosure hot spot," with new foreclosures in Arizona up 155% in August from July. Foreclosures in California were up 32% and New Mexico saw a 10% increase.

-- September 15, 2006

By Danielle Reed

The Wall Street Journal Online

2006-09-13T09:16:00.000-07:00

LOCK THAT QUOTE IN

Mortgage rates aren't any good if you can't lock them in. No matter what you're being quoted, if the lender or mortgage broker can't lock those things -- beware.

I say this because I lost a deal to a mortgage broker the other day. Hey, can't win 'em all, right? Nope, ya can't. But you certainly have to try. No loan officer gets every deal; it's impossible.

In fact, I dare say I've lost as many or more loans that I've won. It's just sometimes when I get beat, and any loan officer out there can back me up on this one, by someone quoting interest rates that are simply not available it burns me up. It just isn't fair.

I know full well my prospective client will get the shaft later on down the road by this person, but there's little I can do. I'm not talking about an 1/8 or even 1/4 percent difference in rate; I got beat by a full percentage point. On the same exact loan!

That doesn't happen. Can't happen. Lenders can't be that far apart in rates. Yet I lost my client to someone who simply "low balled" and got the deal. What will happen is that the loan officer quoting ultra-low rates is simply hoping that rates go down so he can honor his rate quote or tell my prospect that rates went up after he got the application.

Sour grapes, anyone? Maybe. Okay, yeah, sour grapes.

This prospect was a referral from one of my top Realtors, and I quoted my best stuff. But I got a call a couple of days later telling me that my prospect chose someone else who was quoting much lower rates, thank you very much.

"Did you get a Good Faith Estimate?" I asked.

"Yes, I have it right here," he responded, "I'm afraid I'm going to have to go with this other person."

"Okay, thanks for the opportunity, hope I can help you in the future. Can you lock those rates in today with this mortgage broker?"

"No, he said he couldn't lock me in until he had my application in and I paid my application fee, but I can't pass up this offer," said my potential client.

"Hmmm," I said, "Usually someone can lock you in without an application or especially paying any fees, but I guess this loan officer since he has such low rates might have special requirements." I tried to be as diplomatic as possible and certainly with all due courtesy.

What was I supposed to say was, "Hey, you. You're working with a liar. If he can't guarantee those rates -- they aren't there."

But I didn't.

I lost the deal and resigned to keeping my fingers crossed that I'll get another phone call in a few weeks when he's getting ready to close, wanting to know what my rates are. Maybe. Or maybe not because he'll be too far into the process that he can't change lenders.

If your loan officer can't lock in ultra-low interest rates without such stipulations as "pay me some money then we'll talk," then you'd better watch out.

Okay, I know that there are fees that are sometimes paid to lenders upfront for a long term lock or perhaps a lender takes a commitment fee at the beginning of a construction project, but overall a consumer should be able to get what they're quoted. I also know that some lenders don't lock without an application and that's perfectly understandable to make sure the prospect is serious about the transaction.

But if either paying upfront money or providing a completed loan application while accompanied by rates that are literally out of this world -- just watch out. Get your lock confirmation as soon as you can.

I've got a funny joke I like to tell that illustrates the ol' "bait and switch."

A customer walked into a meat market and said to the butcher, "How much is a pound of hamburger today?"

The butcher replied, "My hamburger is $5.00 a pound."

"$5.00 a pound! Why, the market just across the street sells it for $3.00 a pound!" yelled the customer.

"Then go buy it across the street."

The customer said, "Well, I can't because he's out of hamburger."

"That's nothing" said the butcher, "when I'm out, my hamburger is only $1.00 per pound."

Published: September 8, 2006

By David Reed
Realty Times

2006-09-11T13:21:00.000-07:00

UNMARRIED COUPLES WHO BUY PROPERTY NEED EXTRA PROTECTIONS

Marriage comes with financial benefits -- a fact sometimes best recognized by couples who don't or can't get married.

Marriage allows couples tax-free transfers of property and gifts, as well as some inheritance rights without a will. Same-sex couples who can't officially wed, or heterosexual couples who are unwilling to, need to put extra protections into place when buying or sharing property.

Several states are now offering rights for unmarried couples, while others are taking them away. So local laws need to be carefully considered when choosing a home-ownership structure.

Colorado is one of the latest states to propose that same-sex partners receive the same state rights as married couples -- a vote is scheduled for November -- while in Massachusetts, gay and lesbian couples can marry and are afforded all of the same state rights. California, Vermont, Connecticut, New Jersey, Maine and Hawaii provide all state spousal rights to same-sex couples, such as the right to inherit when a partner dies without a will, according to Human Rights Campaign, a gay rights advocacy group in Washington. On the other hand, Virginia law prohibits same-sex unions and says a "civil union, partnership contract or other arrangement between persons of the same sex" created in other states is void and unenforceable.

What people really need to realize is that "real estate is governed by state law, not federal law," says Brian Chase, an attorney with the western regional office of Lambda Legal, a gay rights advocacy group. "So what's best will vary dramatically based on what state you are in."

But even if you're permitted to form a domestic partnership or other union recognized by your state, remember that many of these laws are new, nor are they recognized by the federal government, which makes joint ownership and financial planning more complicated. That's why it's best to work through these issues with an attorney and a financial professional.

Unmarried couples need to decide how to title their home, or how to structure ownership, because different structures have different consequences.

Many unmarried couples choose the "joint tenants with rights of survivorship" structure, which allows for an automatic and probate-free transfer to a surviving partner. Still, for couples with taxable estates, it can trigger an additional tax bill. Since married couples can transfer assets to each other tax-free, estate taxes aren't owed until the second spouse dies.

But unmarried people risk being taxed on a property twice: A surviving partner may pay estate taxes on the portion of a property he or she already owned since the Internal Revenue Service may consider the first partner to die the sole owner, and the full value of the property would be taxed again upon the second partner's death.

Both partners "need to have records to prove their contribution to the purchase and upkeep of the property, or else the IRS will presume the first person [to die] owned everything," says Rick Kraft, an estate-planning attorney in Boston who focuses on same-sex couples.

Tenancy-in-common -- when coupled with a revocable living trust -- is a more flexible way to title one's home, attorneys say. This structure allows partners to own unequal interests in the property, but there's no automatic transfer after one dies unless it's designated by the living trust.

A properly funded trust, in which assets are titled to the trust, is a hassle-free way to leave property to a partner because you avoid probate. And, if you're afraid a family member will contest a will, a revocable trust can be more difficult to challenge, some lawyers say. The trust also can be structured so that after one partner dies, the survivor can live in the home until he or she dies. The first partner's share can ultimately go to someone else -- perhaps a niece or nephew, Mr. Kraft adds.

Feeling generous? Be careful. If you already own property and want to transfer a portion to a partner, it's considered a gift, explains Kathleen Sherby, a partner with Bryan Cave LLP in St. Louis. And "you'd have to file a gift tax return," she adds. (Gifts worth less than $12,000 can go unreported; anything above that amount will begin to eat into your $1 million lifetime gift-tax exemption.)

Although many view prenuptial agreements as unromantic, similar agreements are critical for unmarried, property-owning couples. The agreements -- often called living-together, property, or domestic-partner agreements -- set out in detail how assets should be divided in the event of a break-up or death. In states with laws posing restrictions on same-sex couples, extra care must be taken; these agreements should be clearly structured as an investment or business arrangement.

You will also need to keep track of how much each party contributes to the mortgage. Since unmarried couples can't file joint federal tax returns, they'll have to divvy up deductions on mortgage interest and property taxes. A partner who pays 60% of the mortgage is entitled to 60% of the deductions, says Debra Neiman, a financial planner in Arlington, Mass., who co-founded PridePlanners, a national association of planners who service the gay, lesbian and nontraditional community. In states that do recognize same-sex unions, such as Massachusetts, you might file a joint return on the state level.

-- September 06, 2006

By Tara Siegel Bernard

From The Wall Street Journal Online

2006-09-08T11:40:00.000-07:00

HOUSING SHIFTS MORE TOWARD BUYER'S MARKET THIS YEAR

McLean, VA – Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market Survey® (PMMSSM) in which the 30-year fixed-rate mortgage (FRM) averaged 6.47 percent with an average 0.4 point for the week ending September 7, 2006, up from last week's average of 6.44 percent. Last year at this time, the 30-year FRM averaged 5.71 percent.

The average for the 15-year FRM this week is 6.16 percent with an average 0.4 point, up from last week when it averaged 6.14 percent. A year ago, the 15-year FRM averaged 5.30 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) averaged 6.14 percent this week, with an average 0.5 point, up from last week's rate of 6.11 percent. A year ago, the five-year ARM averaged 5.24 percent.

One-year Treasury-indexed ARMs averaged 5.63 percent this week with an average 0.7 point, up from last week when it averaged 5.59 percent. At this time last year, the one-year ARM averaged 4.45 percent.

"We expect that mortgage rates will continue to fluctuate as new economic data are released, but still remain in the 6.5 percent to 7 percent range for the rest of the year," said Frank Nothaft, Freddie Mac vice president and chief economist. "Slowly rising mortgage rates are offset in part by a slowdown in house price appreciation."

"Consequently, higher rates have resulted in houses sitting on the market for longer periods of time, changing the real estate sector into more of a buyer's market from the seller's market of the last few years. This is a plus, as it allows potential homebuyers more time to look around and decide what they really want and what they can afford."

Published: September 8, 2006

Article offered by Realty Times

2006-09-06T12:42:00.000-07:00

WHY THE END OF THE HOUSING BOOM MAY NOT BE SUCH A BAD THING

Let's be honest with ourselves: Aren't you just a little glad the real-estate boom is over? No more bragging from self-congratulatory owners of property in high-priced areas. No more breathless tales of bidding wars and comparative sales.

Last week's figures for sales of new and existing homes, both showing sharp declines of more than 4%, make it clear that the long-anticipated real-estate downturn has begun. I realize that a significant downturn in any market causes hardship for some. Tales of woe are mounting from the real-estate industry, from home builders and architects, to empty-nesters and retirees hoping to cash out of big homes and move to smaller places.

There is no doubt that the real-estate industry casts a long shadow, which is why some economists and policy makers are fretting about a slumping market's capacity to drag down the whole economy.

But let's look at the bright side, too. The real-estate market during recent years had many unhealthy economic and psychological effects. Soaring prices forced many people, especially young people buying their first homes and starting families, out of many markets. It pushed too many people into dreadful mortgages. It misallocated capital to construction for which there was no fundamental demand.

Market Cooling

Like the tech bubble, the rapid double-digit annual appreciation in real-estate prices couldn't go on forever. It has clearly been cause for pervasive concern at the Federal Reserve, which helped fuel the boom with its superlow short-term rates. Surely Fed Chairman Ben Bernanke and his colleagues are pleased by a cooling of the market. The recent pause or possible end to rate increases seems well-timed to gauge just how cool it's become.

Purging the market of excess speculation will no doubt yield some tales of plunging prices and hardship. But I wouldn't expect an out-and-out collapse, or even anything as severe as the downturn in the early 1990s. As Toll Brothers Chairman Robert Toll said last week, there's no recession, long-term mortgage rates remain low, and there's still demand for housing. This is a pretty healthy environment for housing, even if there are price declines still in store.

What does this turning point mean for investors? It's time to re-think my longstanding aversion to real estate and related investments.

Hard-Hit Stocks

Stocks of home builders like Toll Brothers and Pulte Homes have suffered severe declines; expectations are so low that they seem good values for patient, risk-tolerant investors willing to wait for the market to stabilize. Some mortgage real-estate investment trusts, hard-hit by rising interest rates and fears of an overvalued market, have just begun to tick up. REITs like Annaly Capital Management and Newcastle Investment are both about 20% above their lows for the year. Other REITs, in my view, remain overvalued.

Property itself may also begin to be attractive, either as an investment vehicle or for your own use. In some markets, falling prices for condos compared with rents are beginning to make them attractive to yield-oriented investors. It is a paradox of falling real-estate values that buyers balk at paying far less than they would have in a rising market, simply because they're afraid the value may decline further after they buy. All of a sudden they're market timers, aiming for an elusive bottom.

As usual, and especially for first-time buyers, I don't believe in trying to time the real-estate market. If you like something, it fits your budget, and you plan to be there for an extended period, stop worrying about where prices are headed. Instead, be grateful you weren't buying a year ago.

-- James B. Stewart, a columnist for SmartMoney magazine and SmartMoney.com, writes weekly about his personal investing strategy. Unlike Dow Jones reporters, he may have positions in the stocks he writes about. For his past columns, see: www.smartmoney.com/wsj_common.

-- August 31, 2006

By James B. Stewart

The Wall Street Journal Online

2006-09-04T11:54:00.000-07:00

HOME-BUYING PLANS LOWEST SINCE 1990

Survey: Consumer confidence rebounds, but still weak in August

Consumers' attitudes about home buying remained low in August, with home-buying plans falling to the lowest level since 1990, according to a consumer confidence report.

Overall consumer confidence remains weak, but the pace of decline slowed significantly in late August from the July level, according to a survey released today. The overall confidence rebound was mainly due to the decline in gas prices since the start of August.

"Despite the remarkable resilience of consumers, the data does not indicate a renewed upsurge in consumer spending but that consumers will remain cautious spenders rather than engage in sharp recessionary cutbacks," according to Richard Curtin, the director of the University of Michigan's Survey of Consumers, which releases the report.

The clear exception involved housing. "Consumers held the least favorable home-buying plans since the low point in the 1990 recession, which indicates continued declines in sales of new and existing homes during the year ahead," Curtin said.

The latest data on consumer confidence is consistent with a growth rate in real consumption expenditures that averages about 2.5 percent over the next four quarters.

The Index of Consumer Sentiment was 82 in the August 2006 survey, down from 84.7 in July, and significantly below the 89.1 recorded in August of 2005. The entire August decline was in expectations for future economic conditions, as the Current Economic Conditions Index rose slightly to 103.8 in August from 103.5 in July. The Index of Consumer Expectations, a closely watched component of the Index of Leading Economic Indicators, fell to 68 in August from 72.5 in July and 76.9 in August of 2005.

Most of the rebound in late August involved a reduction in expected inflation and a small upward revision in the anticipated pace of economic growth. "Even after the late August changes, consumers still expected an inflation rate of 3.8 percent during the year ahead, and still anticipated the ongoing slowdown in the pace of economic growth would continue," Curtin said.

The primary concerns of consumers about the ongoing slowdown in economic growth were the creation of fewer new jobs and an increasing unemployment rate during the year ahead. Four out of 10 consumers expected the unemployment rate to increase during the next four quarters.

Consumers reported growing weaknesses in their personal financial situation. "The corrosive impact of inflation on their finances is still the top problem cited by consumers," Curtin said. Consumers voiced even greater pessimism about future changes in the financial situation. Just 29 percent of all households thought that their finances would improve during the year ahead in August; the lowest level since the 1990 recession.

"Consumers are much more concerned about the potential for persistently high inflation than about the potential impact of some additional increases in interest rates," according to Curtin.

Although home-buying plans fell to the lowest level since 1990 in August of 2006, most of the decline was recorded by mid 2005, well in advance of the declines in home sales. "The recent declines in home prices as well as mortgage rates have been reported by consumers, but the declines have not been judged sufficient to adopt more favorable home-buying plans," Curtin said.

***

Friday, September 01, 2006

Article offered by Inman News

2006-09-01T12:24:00.000-07:00

DISCLOSURE AND SAVING FOR A RAINY DAY

You buy the house on Monday, and by Tuesday the upstairs tub starts leaking.

Purchasing a used home is certainly an important part of the American dream. Millions of Americans scrape together their savings in order to come up with a down payment. And when they move in, they don't want the euphoria to end.

For most it doesn't.

But while with homeownership comes the expected mortgage payments, insurance payments, and costs of home maintenance, there are unexpected exceptions.

It's the unexpected that can push home purchasers into financial distress. While most unexpected costs are beyond anyone's control, the subject of this article are those expenses that were truly unanticipated by the purchaser, not by the seller.

For some reason, upstairs bathtubs seem to be a common villain. But plumbing leaks of all types, as well as mold conditions and leaking roofs are certainly high up there. What I'm talking about are problems of which the seller knew of before the closing, but which were hidden from the purchaser. Perhaps negligently concealed, perhaps intentionally concealed.

So what of the leaky bathtub upstairs?

Repairing this will cost thousands of dollars. Sheetrock will have to be torn off, a plumber will have to investigate and identify the source, plumbing will have to be put into place, and then the entire area will have to be restored. The price of repairs will vary on how much you know how to do or how much you'll have to pay a professional. It will also depend on the cost of supplies at that time and how high end you need to go. In some extreme cases, it could cost as much as $5 to $10 thousand dollars.

This is just one example. Obviously, there are no limits to the number of instances in which sellers have failed to disclose hidden problems that become apparent only after the purchase. It might be a leaking roof after the first post closing rain fall, a leaking pipe after the first post closing bath, or the appearance of mold when lights are turned on for the first time in the attic (something a home inspection would surely catch).

In all cases, the question is: What legal rights do these home purchasers have?

Of course, the first place to begin this inquiry is an evaluation of the contract and of local state law concerning issues of misrepresentation. Presumably, the contract provides that the purchaser had a reasonable opportunity to conduct an inspection of the home. And further that the purchaser is accepting the home in as is, where is condition.

As is, where is condition, or similar language, means that the purchaser is taking the property in its existing condition. If there are defects, usually the seller has no liability for them.

Usually, but not always. Where a defect is difficult for the purchaser to find prior to closing, and where the defect was intentionally hidden by the seller, the seller may have legal exposure.

You will need to consult with a local lawyer to determine what your rights might be in a particular case. But often, the litmus test seems to be whether the purchaser could have detected this problem had the purchaser engaged in a reasonable inspection of the home.

If the defect is considered to be "latent," in other words, one that is not reasonably discernible through a proper home inspection, then there is a possibility that the seller will be liable to the purchaser for costs associated with the repair. A local lawyer who understands real estate law in your jurisdiction will help you determine the extent of your rights, if any.

And the law may go beyond that. There may also be a question of whether or not this omission of information was intentional. In other words, did the seller attempt to defraud the purchaser by hiding this defect. In certain jurisdictions, this scenario may make the seller liable for punitive damages and attorneys fees.

Not only are remedies available under traditional state law, but many states have consumer fraud statutes that also apply to these circumstances. They may also provide for punitive damages and for the recovery of attorney's fees.

In conclusion, purchasing a new home is full of excitement and anticipation. Purchasers have to understand that even under the best of circumstances unexpected costs will occur.

However, no purchaser should have to put up with paying for something that was intentionally concealed by a seller. When that happens, and where the costs to the purchaser are substantial, it might be appropriate to seek legal advice from an attorney who understands the law in your particular state regarding these issues.

Published: August 31, 2006

By Stuart Lieberman
Realty Times

2006-08-30T13:40:00.000-07:00

LONG TERM RATES DIP FOR FIFTH STRAIGHT WEEK;
SHORT-TERM RATES ALSO FALL

McLEAN, VA -- Freddie Mac (NYSE:FRE) today released the results of its Primary Mortgage Market SurveySM (PMMSSM) in which the 30-year fixed-rate mortgage (FRM) averaged 6.48 percent with an average 0.4 point for the week ending August 24, 2006, down from last week's average of 6.52 percent. Last year at this time, the 30-year FRM averaged 5.77 percent. This is the lowest the 30-year FRM has been since the week ending April 6, 2006, when it averaged 6.43 percent.

The average for the 15-year FRM this week is 6.18 percent, with an average 0.4 point, unchanged from last week when it averaged 6.20. A year ago, the 15-year FRM averaged 5.35 percent. This is the lowest the 15-year FRM has been since the week ending April 20, when it was 6.17 percent.

Five-year Treasury-indexed hybrid adjustable-rate mortgages (ARMs) fell to 6.14 percent this week, with an average 0.5 point, from last week's rate of 6.18 percent. A year ago, the five-year ARM averaged 5.30 percent.

One-year Treasury-indexed ARMs averaged 5.60 percent this week, with an average 0.7 point, was down from last week when it averaged 5.65 percent. At this time last year, the one-year ARM averaged 4.56 percent.

"The Fed has acknowledged that it is closely monitoring the housing market as it slows down from last year's record pace," said Frank Nothaft, Freddie Mac vice president and chief economist. "Although this fuels arguments about whether we will experience a soft landing or a bursting housing bubble, market watchers also perceive that it possible that the Fed may stop raising short-term interest rates over the near term. This perception takes upward pressure off mortgage rates."

"Meanwhile, although both existing and new home sales for July fell below market expectations -- confirming the slowdown in the housing market -- we still expect 2006 to be the third highest year on record for total sales."

Published: August 25, 2006

Article offered by Realty Times

2006-08-28T12:45:00.000-07:00

LENDERS' WORKOUT PROGRAMS OFFER HELP FOR BORROWERS IN TROUBLE

Whether it's from a job loss, medical emergency, mortgage-payment hike or simply personal-finance mismanagement, a small but growing number of homeowners is falling into foreclosure every year.

For most people who fall behind on their mortgage, their first instinct is to avoid all contact with the lender. But that's a mistake, consumer counselors and others say, because it's likely those financial problems will only get worse, making it harder to work out the best repayment terms.

Many borrowers don't realize that lenders are as eager as homeowners to avoid foreclosures, which cost lenders $40,000 to $60,000 per house, according to industry estimates. Most lenders offer "workout" programs where they work with the borrower on repayment plans that meet the borrower's financial circumstances.

"Going to the lender is ideal. The sooner, the better," said Erica Sandberg, a spokeswoman with the Consumer Credit Counseling Service of San Francisco, certified by the U.S. Housing and Urban Development Department to provide housing counseling.

Lenders agree. "It's never too early and never too late to call your lender," said Loretta Abrams, vice president of consumer affairs for HSBC North America.

And, "any of our borrowers can approach our workout staff," said Tim McGarry, spokesman at Washington Mutual. "It's always our goal to keep people in homes. Foreclosure is a bad outcome for us as a lender."

Justifiably nervous

But plenty of borrowers -- about half, according to some focus-group research -- are afraid that divulging their money woes to their lender will prompt the lender to accelerate the foreclosure process.

That fear is not surprising: Often, when borrowers fall into financial difficulty, their first contact with the lender may encourage them to run in the other direction the next time the phone rings. That's because many lenders, if a borrower is 30 to 60 days' late, initially have the collections department call.

"A collection agent's job is really to get you to pay. They want to know when you're going to pay, how much you're going to pay, how you're going to pay," said J. Michael Collins, a principal at PolicyLab Consulting Group, LLC, a market-research firm focusing on consumers' financial decisions, in Ithaca, N.Y. "It's a very ... aggressive approach."

It's not until the borrower is close to defaulting on the loan that lenders move the account to the "loss mitigation" department, staffed not by collection agents but by people trained to work with the borrower to prevent foreclosure, Collins said.

Some lenders already understand this issue. "Lenders who are working with borrowers who have a history of credit problems, they understand that the first time you make contact with that borrower when they're in trouble, you've got to facilitate a cooperative relationship," Collins said. "But what a lot of lenders are used to is more of a market where people have more income. There's no real good reason for somebody not to pay" is the standard thinking.

Still, Collins says he sees a shift happening, with more prime-market lenders realizing the importance of making that initial contact with the borrower a cooperative one.

Maybe that's because some see delinquency and foreclosure rates getting worse before they get better, thanks to more people holding loans with adjustable rates set to move higher. In some cases those adjustments will push up monthly mortgage bill 30% or more.

More foreclosures coming?

Adjustable-rate mortgages are a growing portion of the mortgage-loan market, accounting for about one-fourth of all home loans nationwide, and three-fourths of subprime home loans in 2005, according to a recent report by ACORN, an advocate for low- and moderate-income families.

"While foreclosure activity continues to remain slightly below historical averages, the number of properties in some stage of foreclosure from January to July has increased by 39% compared to the same period of 2005," said James Saccacio, chief executive officer of RealtyTrac, a foreclosure-tracking company, in a recent press release.

First-quarter data from the Mortgage Bankers Association shows delinquency and foreclosure rates essentially flat, and still a small portion of the overall loan market. But there's been an up-tick in late payments among borrowers with subprime credit.

About 4.41% of all loans were late 30 days or more in the first quarter compared with 4.31% for the first quarter in 2005, according to MBA. That delinquency rate includes homes in the foreclosure process.

For loans held by borrowers with subprime credit, 12.02% of adjustable-rate loans were delinquent, up from 10.25% a year earlier, according to the MBA, which says its survey covers about 80% of residential mortgage loans in the U.S.

"When these people get faced with their first increased payment and their payment goes from $600 to $1,200, that's very difficult for folks to deal with," Collins said. Some borrowers "had no idea their payment was going to go up this much," he said, citing his research with focus groups of borrowers in default on their adjustable-rate mortgages.

And it's not only working-class people who are surprised, said Douglas Robinson, a spokesman for NeighborWorks America, a nonprofit company that works on housing and community-development issues.

"We're seeing more and more middle-income homeowners who are in trouble, particularly on the coasts -- the Boston, New York, California markets where home buyers may have stretched just a little bit to get into that house in those high-priced markets ... and for whatever reason they miscalculated the increase that would occur," Robinson said.

Consumer counseling agencies also say they've seen a rise in the number of people coming to them with mortgage-related problems.

"We're seeing a surge in the people who are calling because they have [adjustable-rate mortgages] and they can no longer afford the monthly payment," said Sandberg, of CCCS in San Francisco. "They end up behind on their credit-card payments. Then they can't refinance the mortgage because their credit is damaged. Then they're stuck with these high mortgage payments and damaged credit."

Meanwhile, the number of homeowners seeking help from her agency in preventing a foreclosure jumped 125% in the past two years, said Betty Parker, housing coordinator for the Consumer Credit Counseling Service of North Central Texas. "We see well over a hundred foreclosure preventions a month," she said.

What to expect

The good news is lenders do want to work with borrowers. If your lender's collection department is still calling you, consider working with a third-party housing counselor.

You can reach housing counselors by calling 888-995-HOPE, a number recommended by NeighborWorks America. Or you can call 866-845-2227 to reach one of 1,000 housing counselors certified by the National Foundation for Credit Counseling.

Be sure to confirm the U.S. Department of Housing and Urban Development has certified those counselors.

"It's better if they're working through an agency. I think the lender will be more responsive," said Ron Chicaferro, executive vice president of Thornburgh Mortgage, in Santa Fe, N.M.

When you start negotiating, your lender will likely offer you one of its "loan workout" options, which tend to be about the same across lenders, though some lenders are more willing to work with borrowers than others. "Some of them are great and some of them are ... a little more challenging," Parker said.

One option is a repayment plan, where any late payments are spread out and added to your regular mortgage bill. Another common option: Forbearance, where mortgage payments are reduced or suspended for a set period of time.

Some borrowers are eligible for mortgage modification, essentially a rewriting of the loan to extend its term or to reduce the interest rate.

Then, there's the short sale: In a situation where the borrower is simply unable to maintain the mortgage payment, the lender will sometimes allow the borrower to sell the house for less than the outstanding balance on the loan.

The borrower has to arrange the sale, but gets to walk away without a foreclosure on record (though the seller may owe taxes on the portion of the loan that the lender has forgiven). The lender doesn't have to deal with foreclosure proceedings or with selling the house.

Plenty of Web sites offer valuable information:

Tips on avoiding foreclosure, from CCCS of San Francisco

The Hope for Homeowners site also has tips

The NeighborWorks America site also has useful information

Also, check your state and city Web sites for "consumer affairs" or "consumer services" - they often list homeowner assistance programs, said Abrams, of HSBC.

-- August 22, 2006

By Andrea Coombes

From MarketWatch

2006-08-25T13:28:00.000-07:00

WHAT DO AGENTS REALLY BRING TO THE TABLE?

I hate going to the dentist. I've always had good teeth, only one cavity in my head, so why spend all that money (not to mention the dental insurance) on a service I've never really needed. As long as I brush and floss, why do I need someone with a doctor's degree to look over my teeth, clean them, whiten them, etc.?

Besides, I've pulled teeth myself -- when I was just a grade school kid, in fact. So if I can pull teeth at that age, with just a string and a doorknob, why on earth do I have to pay a professionally trained tooth puller now? As I reminisce on those days of my early tooth-pulling, I even recall getting paid for pulling my own teeth! That's right. Every morning after pulling my teeth, I had money under my pillow.

Obviously, anyone who has received quality dental care in the past sees right through the absurdity of this argument. However, when it comes to real estate agents, everyone wants them to provide their services for discounted prices – even free.

Licensed real estate professionals bring state-mandated training and knowledge to the table for buyers and sellers. In fact, agents have to get as much, or more, training than what it would take for some college degrees before being given permission by the state to represent buyers and sellers in the transaction.

By the time a transaction is over, it is chock full of legally-binding documents controlling the transaction, pulling two parties together to exchange hundreds of thousands of dollars to complete a transaction that they may be involved in only a couple of times in their life.

Both the buyer and seller must perform to the contract, and most times, they don't even know how or what they're supposed to do to perform the paragraphs they just agreed to perform.

Nearly half of the buyers are purchasing for the first time, according to the National Association of Realtors. They only think agents are there to usher them into houses and that's it. And that's because hundreds of thousands of agents make that tooth extraction look so easy.

Why should you have a real estate agent on your investing/buying/selling team when it comes to building wealth?

There's talk on Capitol Hill of how the real estate industry has a "strangle hold" on the business. It makes me want to, not so much defend, as much as bring to the forefront what licensed professionals actually bring to the table for consumers.

You've heard the term, "You get what you pay for," and that doesn't go wasted on agents as well. Many sellers would love to get through the transaction themselves, without any help from a "middle man," to save the commission dollars. It sounds like it makes sense, "Hey, why pay thousands of dollars of your money to sell a house when you can do it yourself?"

But every agent has a real estate license regulated by the state. This means they are knowledgeable about various aspects of real estate law, rules and regulations, such as:

What rights exist for land and how they can be traded

How title can be held and how to ensure clear title to the land

Financing: traditional, non-traditional, owner-held, etc.

Fair housing laws: federal, state and local

Local limits on the sale and trade of real estate

State disclosure laws and regulations on the trade of real estate

Contracts and forms

Most sellers and buyers I've talked with, while having access to plenty of "information" on the internet about the sales transaction, do not have a handle on the nuances, pitfalls, and inherent dangers of legal problems they can face in the midst of this huge investment.

Published: August 25, 2006

By M. Anthony Carr

Realty Times

2006-08-21T10:21:00.000-07:00

WATCH OUT FOR UTILITY TREE EASEMENTS

No matter where you live, whether it's in an urban area, a residential area or an agricultural area, you can appreciate the value of a tree. Trees do so much for us.

Obviously, they provide us with often much needed shade. But in addition to shade, they also help reduce soil erosion and prevent flooding. A mature tree can consume a substantial amount of water every day, thereby reducing flooding.

Sometimes, property owners must take legal action in order to protect their trees. This kind of legal action is more common than you might think.

A common problem that I wish to focus on in this column concerns utility easements on property. The easement may be for a common electric line, a telephone company line, or even a natural gas line. Many homeowners have property subject to these easements.

The easement allows the utility to run its line or pipe on, under or over a piece of property. In turn, the property owner, or its predecessor, is usually paid a small amount of money. In the case of a subdivision, often the developer receives the payment. The subsequent purchasers often receive no money, but must be forever burdened by the easement.

Utilities could never exist without these easements because their network of pipes and wires needs to reach out into the community and this can only be done through easements.

What I am referring to in this article is a common easement condition requiring that the ground in the areas of the pipes and wires be maintained so as to allow for repairs and inspections. Some utility companies are claiming they have a right to cut down trees, often mature trees, pursuant to this easement requirement.

The question is: Do you have to allow the company to enter your property and destroy your trees? The answer is maybe yes, and maybe no.

What follows are some factors that may resolve this question.

The first question concerns the utility easement language. How specific was the easement? Was it clear that trees can't be planted over the easement area? Or did it only require that if any vegetation exists, it be maintained in good order so that visual inspections can occur and physical access can take place?

Does the easement specifically provide for the right to remove trees? Or is this right being presumed by the utility company?

How long has it been since the last time that the utility sought to enforce its rights under the easement. If it has been decades, did the utility effectively forfeit its rights under the easement?

What is the purpose of the easement? Are less invasive means of satisfying its goals available other than tree removal?

Was the property use restriction properly recorded so that the property owner had a way of knowing about the restriction before the purchase was made. If not, it is possible that the restriction may not have legal force.

Sometimes these matters can be resolved through compromise. Perhaps a better maintenance campaign can resolve any concerns that the utility might have.

However, if the utility is dead set on removing mature trees from your property, you need to decide whether the value of those trees is worth seeking legal assistance. The utility will have an experienced lawyer. If you want to fight for your rights in court, you too will likely need one.

If your lawyer determines that you have a legal right to stop any tree destruction, there is a good chance that your lawyer will go into court and ask for an injunction. An injunction is a court order that stops the utility company from taking down any trees until the court has an opportunity to engage in further evaluation of the merits.

Injunctions are not easy to obtain. Your ability to obtain one will be largely dependent on an ability to demonstrate irreparable harm if an injunction is not granted as well as an ability to demonstrate that the legal issues are on your side.

The legal issues can be complicated and very fact specific. The key, however, is that simply because a utility claims a right to destroy your trees does not mean that it really has that right. I am a tree person who feels badly when mature trees are unfairly destroyed. I wish any one whose trees are at risk the best of luck.

Published: August 17, 2006

By Stuart Lieberman

Realty Times

2006-08-18T09:05:00.000-07:00

SINGLE GIRL POWER GROWING INFLUENCE IN REAL ESTATE

Ladies, take note, you've begun taking a larger role in the area of homeownership over the last few years, according to a new study from the Joint Center for Housing Studies at Harvard University.

"Not only are unmarried women a large segment of the home buying population," says Rachel Bogardus Drew, the author of the report, "but they are fast-growing, too, increasing their share of home buyers by 50 percent in eight years. The value of their home purchases over a 3-plus year period totaled more than $550 billion ... ."

The study is as much a report on the sociological changes in our country as on the buying practices of women. The continued breakdown of the family has pushed women to start fending for themselves, financially, instead of waiting for the combination of salaries with a mate to purchase a home.

"Two out of three female buyers were previously married, though that share drops significantly for younger buyers," Ms. Drew points out. "They also have lower incomes than unmarried men and married home buyers, but are less apt to finance their home purchase."

Still, the overwhelming buying segment is made up of married couples at 63 percent, but now unmarried women are the second highest buying group (at least when looking at marital status) at 20 percent in the last three years. Unmarried men make up 17 percent of the buying pool.

The demographics paint an admirable picture of the group, being older than their unmarried male counterparts, and facing many obstacles, demonstrating their determination to get in the real estate ownership circle. They also have lower incomes and many of them are buying with children in tow (30 percent).

Financially, they've demonstrated that even with lower incomes, homeownership is available. At $37,000, their median income is 11 percent less than single men, but account for why they are less likely than married couples to live in single family homes -- however, the majority of them were move up buyers in the last three years. They are plodding along with wealth growth, taking a patient path to building their net worth by buying low, selling when the market grows and moving into a larger, more expensive dwelling.

The growth of this demographic has not gone unnoticed, as both for-profit and not-for-profit entities have begun initiatives to help women in their quest for homeownership. One of the groups was the Women's Mortgage Industry Network (WMIN), which was launched four years ago and is sponsored by Freddie Mac. The group's goals include engaging "the mortgage industry and non-financial service providers in a targeted education and counseling campaign that it believes will help close the gap in homeownership rates," according to information from FreddieMac.com.

One of the most interesting points of this report was one of the buying options Ms. Drew uncovered in her report of single women, purchasing in a co-housing community.

"Co-housing communities, though relatively small in number -- about 50 in the U.S. -- are an attractive choice for women who want the privacy of their own home with the benefit of a supportive, surrounding community. These communities typically consist of 12 to 42 self-sufficient private dwelling units, but also include a common kitchen/dining space where meals are shared as well as communal outdoor space. Other arrangements help to pair single mothers looking for a shared living situation," she writes.

"By pooling incomes single mothers can often afford to buy a more desirable home, and by living together they can share household tasks and childcare, which can free up valuable time. Living with someone can also provide critical emotional support and help make single parenting less exhausting and lonely."

Obviously, this is a growing segment of the real estate industry and will continue it's upward trend with the aging of the baby boom generation and the natural selection of women living an average seven years longer than men.

Published: August 18, 2006

By M. Anthony Carr

Realty Times

2006-08-16T13:27:00.000-07:00

NAR PRESIDENT SAYS FED DECISION IS GOOD FOR HOUSING

WASHINGTON (August 9, 2006) – The decision yesterday by the Federal Reserve’s Federal Open Market Committee not to raise the federal funds rate for the 18th straight time indicated that the Federal Reserve recognizes the value of the housing economy to the national economy as a whole, the president of the National Association of Realtors® said today.

“This move sends a very positive signal to the housing sector, which has been so robust over the past five years that it has sustained the economy while other sectors have lagged. Largely as a direct result of more than two years of interest rate hikes, the housing market today is fragile in some parts of the country. The Fed’s decision indicates that it realizes the vital role housing plays in the economy,” said NAR President Thomas M. Stevens, senior vice president of NRT Inc.

The decision by the FOMC leaves the banks’ prime lending rate, the benchmark for various consumer and business loans, at 8.25 percent. Before the Fed started raising rates in June 2004, the prime had been at 4 percent.

Stevens said the Fed’s decision indicates it realizes the economy has slowed, especially the housing economy. “We can’t continue to raise rates without expecting the housing economy to suffer. That translates into higher costs for home buyers, slower sales and a lower level of economic activity in housing, which accounts for one-fourth to one-fifth of the gross domestic product,” he said.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.

Article offered by NAR

2006-08-14T13:33:00.000-07:00

SWIMMING POOLS: DO THEY INCREASE OR DECREASE A HOME'S VALUE?

Maybe the sweltering days of summer have you wishing for a pool as a backyard oasis.

Like Clark Griswold in "National Lampoon's Christmas Vacation," who fantasizes about buying an in-ground pool with his holiday bonus, you can see it already: The crystal clear water, the poolside deck, the floating raft just waiting for you to climb on and sunbathe.

You're not alone.

Some real estate professionals caution that a swimming pool can be a deterrent to some buyers when the home goes back on the market; having an in-ground pool in the backyard has the potential to dissuade an interested buyer with no desire for the feature or the maintenance it demands.

Still, Americans apparently can't stay away from buying personal water wonderlands, according to statistics compiled by the Association of Pool & Spa Professionals. It isn't just the pool itself, either; many times the backyard investment continues poolside with the installation of homey decks and outdoor kitchens.

In 2005, 176,500 in-ground pools were sold and installed, bringing the total number of those pools in the country up to 4.7 million, according to the association's statistics. About 4.3 million pools were sparkling throughout the country in 2002.

Also in 2005, 219,000 above-ground pools were sold, bringing the total number of them in the country to 3.6 million, the association found. About 3.4 million above ground pools were scattered throughout the country in 2002.

And in some areas of the country, a house's pool is more of a necessity than a flaw.

Smart swimming

In places where pools are common, "a house without a pool would be harder to sell," said Brian Van Bower, president of Aquatic Consultants Inc., a pool-design firm based in Florida.

Seven in 10 Arizona homes have pools, said Roger Soares II, president of Hydroscapes LLC, a pool-design and construction company based in Arizona. "In a lot of areas it's not a need, but here it's a necessity because it's so hot."

Often times, homeowners would rather buy a home with a pool than have to install it themselves, Soares said. If you do buy a home that already has a pool, make sure to get it looked at by a qualified pool inspector, said Suzanne Barrows, spokeswoman for the Association of Pool & Spa Professionals.

"We recommend that you have the pool inspected by a pool person, but in some cases home inspectors have taken education courses so they know what to do," Barrows said. "If the home inspector is a reputable inspector and he or she doesn't know how to inspect a pool, they'll say so, and the good ones will have names of people in the area who could do it."

But if you're already settled and are contemplating buying a pool for your home, it's best to think before you dive.

Above-ground pools traditionally don't add any value to a home come resale time, according to research from the National Association of Realtors. They also aren't much of a deterrent to buyers because they can be easily removed, said Wallace Perry, Coldwell Banker United, Realtors' president and chief operating officer for the Carolinas region.

"It's not enough of an economic factor to influence it (the sale) either way," he said. A seller might even take the pool down and bring it to their new home.

In-ground pools have a different story.

They do tend to add value to a home -- about 7.7%, according to National Association of Realtors statistics. Regionally, in-ground pools will add about 5% to the value of a home in the Northeast part of the country, about 6% in the Midwest and 7.5% in the Southeast and West. In the Southwest, a swimming pool will add nearly 11% to the home's value.

But because they're permanent, buyers who aren't interested in the upkeep or the energy costs of in-ground pools may turn away from a home with one, Perry said. Heated pools especially can run up a power bill, he said.

The feature seems to interfere more often in the sale of lower-priced homes -- homes with selling prices of less than $200,000, Perry said. On the higher end of the market, a pool doesn't seem to be a factor and will probably even enhance a home's appeal, he said.

In general, in-ground pools will usually return 50% of their original cost when the home is sold, Perry said. Depending on location, the age of the pool and maintenance given throughout its lifetime, the return could be even less, said Carolyn Helmlinger, president of Coldwell Banker Mid-America Group, Realtors in Des Moines.

Your own enjoyment, therefore, should be the primary reason for installing a pool.

"If you're going to put in a pool, you need to be comfortable that you're going to be there more than five years," Perry said.

Deep pockets

Another reason to tread carefully before buying a swimming pool: It's a big investment of money and time.

Again, above-ground pools aren't as permanent or as pricey, with many of them available for a couple thousand dollars or less.

Although there are still companies advertising in-ground pools around $16,000, the average price is more like $30,000 to $35,000, which would get its owner a water feature and possibly a spa, Soares said. Landscaping around the pool could cost anywhere from $3,000 to more than $100,000.

Then there's the maintenance once it's installed.

Running the filter -- assuming you have an efficient pump -- will cost an average of $20 a month if it's run all day, every day, Soares said. Chemicals could cost between $5 and $20 a month in the winter and anywhere from $20 to $100 a month during the summer. Pay someone to take care of the pool instead and the going rate is around $65 a month, he said.

Easier chemical distribution through automated dispensing has helped save time and eliminate some of the hassles of pool care, said Ed Kahn, editor of pool magazines including "Pool & Spa Living." Also popular: salt chlorination systems, which covert regular salt to chlorine and prevent pool owners from ever having to buy a chemical.

Emerging pool styles are tailoring to customers' needs as well. New, smaller pools, for example, are configured in a way to provide some of the benefits of hot tubs, Kahn said.

"It looks like a small pool, it has the propulsion system that creates a current in the water so you can literally swim in place as if you're swimming in a large pool," he said. On resting days, owners can use the pool for hydrotherapy.

Aquatic fitness centers produced by Vista, Calif.-based Dimension One Spas allow for vertical and horizontal exercises with less impact, said Bob Hallam, the company's president. They also take up less space.

The pools are so popular, the company is doubling production this year to meet demand, he said. Models run from $25,000 to $35,000, he said.

Why the surge of popularity for the product? "We're all aging, and a lot of people my age -- which is a baby boomer -- still want to keep in good shape," Hallam said. The warm water lessens impact on the joints.

Pool envy?

If the memory of a fun Fourth of July pool party at the neighbor's house still has you desiring your own aqua retreat, Barrows offers these questions to consider before heading to the show room or calling a builder:

What do you want to use the pool for? Is it for exercise or to splash around in? Look around online for styles and prices. The Association of Pool & Spa Professionals' consumer site, www.poolpeopleusa.com, is a place to start.
Who is going to use the pool? Adults? Children? The association also maintains a site for kids, www.splashzoneusa.com, that emphasizes pool safety.
Do you want the design of the pool to mesh with the rest of the yard? Landscaping can be as simple as a small deck and as elaborate as an outdoor kitchen with fire pits and pizza ovens.
What kind of pool do you want? In-ground? Above-ground? A swim spa? Consider what kinds of pools are in your neighborhood or talk with a local real estate professional if you have any concerns about what installing a pool will do to your resale value.

Above all, talk to pool owners before jumping into a purchase, Soares said. Ask them how they liked their builder. Do additional homework by checking a builder's references and finding out how long they've been in business.

"It's amazing how many people will not do that," he said.

-- August 09, 2006

By Amy Hoak
From Marketwatch

2006-08-11T09:39:00.000-07:00

HOME SALES TO HOLD FAIRLY STEADY FOR BALANCE OF YEAR

WASHINGTON (August 8, 2006) – The housing market is in a process of stabilizing with little change in overall sales volume expected over the balance of the year, according to the National Association of Realtors®.

David Lereah, NAR’s chief economist, said the indicators already are leveling-off. “We’ve seen a minor easing in closed transactions of existing-home sales, and a slight increase in the leading indicator of pending sales based on contracts,” he said. “New-home sales and housing starts have been fluctuating, so the overall market is stabilizing.”

“On one hand is the rise in mortgage interest rates that has slowed sales in many higher-cost markets, and on the other is 3.8 million new jobs over the last two years,” Lereah said. “This means many potential home buyers could enter the market in the foreseeable future, especially in moderately priced areas where affordability conditions remain favorable. In fact, this is already occurring.”

Although sales will be fairly steady over the balance of the year, declines since last fall mean annual totals will be lower. Existing-home sales are forecast to fall 6.5 percent to 6.61 million this year, the third highest on record after 2005 and 2004. New-home sales are projected to drop 12.8 percent in 2006 to 1.12 million, also the third best on record. Housing starts should be down 9.1 percent to 1.88 million this year.

The 30-year fixed-rate mortgage is running nearly a percentage point higher than a year ago but is likely to rise very slowly in the months ahead, reaching 6.9 percent in the fourth quarter.

NAR President Thomas M. Stevens from Vienna, Va., said current market conditions are favorable for buyers. “The rise in housing supply is the biggest change in the market over the last year,” said Stevens, senior vice president of NRT Inc. “Clearly, this has taken pressure off of home prices and has significantly widened choices for buyers. At the same time, sellers are getting excellent returns – but in this competitive environment they need real estate professionals more than any time since the 1990s to market their homes and maximize value.”

The national median existing-home price for all housing types is forecast to grow 4.3 percent this year to $229,000, while the median new-home price is expected to rise only 0.5 percent to $242,100 as builders offer incentives to clear unsold inventory.

The unemployment rate should average 4.7 percent for the balance of the year. Inflation, as measured by the Consumer Price Index, is likely to be 3.5 percent for 2006, while growth in the U.S. gross domestic product is projected at 3.5 percent. Inflation-adjusted disposable personal income is expected to grow 3.0 percent this year.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries.

# # #

Article offered by NAR

2006-08-02T12:58:00.000-07:00

CREDIT SCORES ARE EVER-CHANGING

What do you do if your credit score is high enough to obtain the rate and product you are seeking, but is not as high as you think it should be?

"Leave it alone," says Southwest Florida mortgage broker Frank Cicione.

"This is not an ego trip," Cicione advised his colleagues who were taking a four-unit continuing education course in understanding credit scoring at the Florida Association of Mortgage Brokers annual convention last week in Tampa.

"If it ain't broker, don't fix it," he told the class.

Not messing with a good thing is sound advice for consumers. Why? Because trying to improve your score could actually result in a lower score, not a higher one. Some steps to a higher number are counterintuitive, such as opening a new account and closing out an old one, a step that you could really mess up your score.

Another common mistake borrowers make is showing up at a broker's office with a credit score that has been purchased over the Internet. More likely than not, Cicione told the class, the score you have in your hands is going to be 50-60 points lower than the classic FICO score the mortgage business goes by.

"It's going to be lower than our industry-specific score almost every time," the 36-year mortgage industry veteran said of generalized scores designed for sale to consumers, but not businesses.

A savvy broker trained in the nuances of credit scoring will advise borrowers right away that the score they purchased off the Internet is not the same as the one used by lenders so that there will be no surprises.

But if your broker didn't mention that and the score he receives is much lower than the one you pulled, don't be alarmed. He's not trying to rip you off by forcing you into a higher-rate loan.

Cicione, a broker in the Ft. Myers area who was president of his state trade association in 1999, also pointed out to the class that mortgage scores are nothing more than a "snapshot" of the consumer's credit profile at a particular point in time. "Thirty-days later," he said, the score "could be very different, even if they don't do anything rash," like buying furniture or a new car on time.

Credit scores "are active things," he said. "They're vibrant, and a new score is generated every single time" an inquiry is made.

To understand why you didn't score better than you expected, Cicione told the class to ignore late payments and look instead to the four reason codes or key factors given with each score.

"These codes are your roadmap," he said. "They are listed in the order of importance or weight causing a negative impact when calculating the score. And they should be relayed back to the consumer to explain how they can change their credit profile and increase their score over time."

Although other things often contribute to a lower score, he added, the reason codes list the more important problems that lead to lower scores. And here's another tip: While four factors will be listed, the first two "are the ones you really want to pay attention to," according to the long-time broker. "The lower ones are probably not worth worrying about."

Published: July 26, 2006

by Lew Sichelman

Realty Times

Highlands County Real Estate Update

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Do Not Call Registry - You're Number May Expire Soon

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Highlands County - Back to School

Are You Killing Your Credit Score?

Moving With Children

Highlands County Florida - The Best of Both Worlds

Happy 4th of July!

Does Your Home Need Some Sprucing Up? Four Easy Home Improvements

Happy Father's Day!

Buying a Home - How Much Can You Afford?

How to Organize Your Move or Relocation

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Alternative Landscaping and Water Conservation

Home Security - High Tech Monitoring

Your Credit Score - Part 3 - The Key to Improving Your Credit

Your Credit Score - Part 2

The Importance of Your Credit Score

Happy Easter

A "Growing" Concern for Homeowners

The Buzz About Home Staging

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What does this subprime fiasco mean for you and the value of your home?

Lower Heating Bills This Season?

Baby Boomers Influence The Market