CHICAGO (AP) – Oct. 12, 2009 – For all the doom and gloom about the housing market, it still generally pays to own a home.
That might be a tough case to make right now to the 16 million homeowners who owe more on their mortgage than their house is worth. But history suggests the American Dream is a pretty safe bet.
Homes have appreciated by an average of 4 percent a year since World War II. They act as hedges against inflation and bestow significant tax benefits. Real estate is a leveraged investment; a 10 percent downpayment produces a 1,000 percent return if the price of a home merely doubles.
Plus there are intangibles: Owning a home provides a sense of independence, security and community. And you get to live in your investment. You can’t do that with a stock.
Of course, historical trends don’t pay the mortgage. People who wade in and out of the housing market too often, or who buy at the wrong time or price and need to sell quickly, can get burned.
But if you own for a decade or more, price appreciation usually overcomes even bad slumps.
Tony and Liz Iacobelli, who are far under water on the home they bought in the Phoenix suburb of Buckeye three years ago, aren’t panicking. They owe about $177,000 on their mortgage on a house worth only $132,000, which is about 40 percent of what they paid.
“Houses generally go up in price, and this one will again, too,” says Tony, 51, a retired New York City policeman.
Several booms and busts have occurred in the modern era of housing, which began when 30-year loans became widely available after World War II. This bust has been severe: Nationally, home prices are down an average 30 percent from their peak in 2006.
The collapse of the housing market may have put an end to the notion of using a home as a speculative investment akin to a hot stock. And that may not be a bad thing, economists say.
“People should recognize that value comes from a lot of other things besides a possible return on the investment,” says Joel Naroff, chief economist at Naroff Economic Advisors.
Economists say home prices have risen by about half a percent a year above inflation, or roughly 4 percent, since the 1940s. That number, which is based on the median price of homes sold each year, was inflated a little by baby boomers starting families and building bigger houses. Since the National Association of Realtors began compiling statistics in 1968, the median sales price has climbed 6 percent annually, from $20,100 that year to $195,200 this past August.
In the late 1990s, home values started growing like stocks. For the next five years, they appreciated at 8 to 9 percent a year, or about 5 percentage points ahead of inflation.
You won’t find many skeptics among people who bought homes in the ‘90s and still live in them. Their homes may be worth tens of thousands of dollars less than at the peak, but they’re still frequently worth twice what the buyers paid. For example, a house in Ewing, N.J., that sold for $160,000 in 1996 was worth about $410,000 three years ago. It’s still worth $375,000 today.
Home buyer beware, however: Price declines do occur with some regularity. Besides the 30 percent price meltdown of the last three years, the Standard & Poor’s/Case-Shiller index of home prices in 10 cities shows four declines lasting six months or more since 1990. The declines averaged 3 percent.
And whether large or small, a drop can be followed by several years of flat prices. After the 1990-1991 recession ended a housing boom, prices didn’t start increasing nationally until 1997. So homeowners who buy at the wrong time can go years without gains.
The hefty costs of homeownership also can work against people who aren’t committed to settling in for a while. Transaction costs – home inspections, sales commission, fees, transfer taxes – run thousands of dollars every time you buy or sell.
And most people overestimate the tax benefits. They don’t realize the standard deduction they would get if they didn’t itemize might be nearly as great as their housing deduction, says Dean Baker, co-director of the Center for Economic and Policy Research in Washington.
For example, a homeowner with a $200,000 mortgage might pay $11,000 a year in interest and $2,000 in property taxes. That’s $13,000 - a healthy deduction, but just $2,100 more than the standard deduction of $10,900 for those married filing jointly.
And as a homeowner pays less each month toward interest and more toward principal, the deduction will shrink – until it falls below the standard deduction, which rises to keep up with inflation, Baker says.
Of course, paying principal builds equity and is the equivalent of a forced savings plan, which can finance big expenses such as college tuition. In the long run, many people fund their retirement partly by selling a home they’ve owned for many years and moving into smaller, cheaper housing.
Another reason to buy a house is it’s a leveraged investment; you pay only a fraction of the price with your own money, which can produce an enormous return. If you make a downpayment of 10 percent on a $200,000 house and it doubles in value to $400,000, your $20,000 investment has grown to $220,000, a return of 1,000 percent. That’s like buying a $40 stock and watching it soar to $440.
But how can you tell in the short run whether it’s better to buy or rent? There’s a way to gauge how expensive homes are – the price-to-rent ratio.
The ratio is determined by dividing the price of a home by the annual rent that could be earned from it. Since 1986, the ratio has averaged 9. Anything above that suggests it may be better to rent, depending on your area.
After soaring to 15 at the end of 2005 – above 20 in some areas – the nationwide ratio has dropped back to 10, according to Economy.com data, making ownership far more attractive.
Prospective buyers can do the price-to-rent calculation themselves. For example, if you can purchase a home for $180,000 but can rent a similar one for $18,000 a year ($1,500 a month), your price-to-rent ratio would be 10, making the buying price reasonable and close to average. And you would have the tax benefits and equity that you don’t get with renting.
It would be nice to say home prices rise reliably and steadily – and a few years ago they seemed to. But that “sure thing” is no longer.
Short-term prospects are cloudy. Many economists expect home prices to keep falling through 2010 as mounting unemployment, foreclosures and a glut of unsold homes all weigh on the housing market.
Robert Shiller, a Yale University economist and co-inventor of the Case-Shiller index, says he expects home prices to be roughly flat for five years.
Yet housing has proved a good investment if you stick with it. And with prices already having fallen so far, buying now could make it an even better one.
Copyright © 2009 The Associated Press, Dave Carpenter. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
Wednesday, October 14, 2009
Thursday, July 16, 2009
Open the Door to the Home You Want
5 Ways to Raise Your Credit Score - And Fast
Purchasing a home can feel overwhelming for buyers no matter how many times they've been through the process. And today, your credit score is more important than ever when it comes to your ability to buy the home you really want. If you are looking to improve your credit score, now is the perfect time to get started. Here are some great strategies you can utilize right away to give your score a little boost. And check out the accompanying video with Linda Ferrari from Credit Resource Corporation for even more details.
Create Some Balance: While paying down installment debt (car, school, mortgage, etc.) will definitely boost your credit score, paying down or paying off revolving debt, such as credit cards, can cause a quick jump in your credit score. The trick is to get and keep your balances below 30% of your credit limit on each card. For faster results, attack those cards with balances closer to their respective credit limits first, as opposed to those cards with simply the highest debt. Remember, if you pay off any credit cards completely, do not close your accounts without discussing it with your mortgage professional first. Cancelling those cards may inadvertently undo all of your hard work.
Know Your Limits: Make sure that your credit card issuers are reporting the correct limits on your accounts to the three major credit bureaus. Without an available limit, your account will appear to be maxed out at its highest reported balance each month. This could cost you up to 80 points in certain instances. Some creditors, such as American Express® and certain cards issued by Capital One®, actually have a policy of not reporting available credit. However, most companies will report your credit limits if you ask them in writing.
Take Some Credit: If you have a credit card account in very good standing, make sure that all three credit bureaus know about it. Just like your credit limits, some creditors don't report your information to all three credit companies – this is why credit scores often vary between bureaus. If this is the case, give them a call to find out why. Correcting this oversight could provide a significant boost to your score. Also, if you're in very good standing, ask your creditor for a lower rate or higher credit limit. This will increase the gap in the debt you owe versus the credit you have available. Sometimes hinting about closing an account can suddenly bring out the generous spirit of certain card issuers. Give it a try. The worst they can say is no.
Protect Your Interests: Your credit is calculated based solely on the information available to your creditors. If you have a HELOC, make sure it's listed as a mortgage or an installment account on your credit reports and not a revolving debt. If you had a bankruptcy, be sure that all items associated with the bankruptcy are being reported correctly, that is with a zero balance. This action could increase your score by 50-100 points. Because simple mistakes like these can wreak havoc on your credit score, it's important to monitor your credit every four to six months.
Even the Score: If you find information on your credit report that you believe is inaccurate or incomplete, then you have the right to dispute it free of charge. For the fastest results, visit the appropriate credit bureau's website and file a complaint online. If supporting documents are necessary, you have to file your dispute by mail. With just a little bit of effort, you could be well on your way to a higher credit score...and to owning the home of your dreams!
Copyright 2009 All About News, Inc. & You Magazine
Purchasing a home can feel overwhelming for buyers no matter how many times they've been through the process. And today, your credit score is more important than ever when it comes to your ability to buy the home you really want. If you are looking to improve your credit score, now is the perfect time to get started. Here are some great strategies you can utilize right away to give your score a little boost. And check out the accompanying video with Linda Ferrari from Credit Resource Corporation for even more details.
Create Some Balance: While paying down installment debt (car, school, mortgage, etc.) will definitely boost your credit score, paying down or paying off revolving debt, such as credit cards, can cause a quick jump in your credit score. The trick is to get and keep your balances below 30% of your credit limit on each card. For faster results, attack those cards with balances closer to their respective credit limits first, as opposed to those cards with simply the highest debt. Remember, if you pay off any credit cards completely, do not close your accounts without discussing it with your mortgage professional first. Cancelling those cards may inadvertently undo all of your hard work.
Know Your Limits: Make sure that your credit card issuers are reporting the correct limits on your accounts to the three major credit bureaus. Without an available limit, your account will appear to be maxed out at its highest reported balance each month. This could cost you up to 80 points in certain instances. Some creditors, such as American Express® and certain cards issued by Capital One®, actually have a policy of not reporting available credit. However, most companies will report your credit limits if you ask them in writing.
Take Some Credit: If you have a credit card account in very good standing, make sure that all three credit bureaus know about it. Just like your credit limits, some creditors don't report your information to all three credit companies – this is why credit scores often vary between bureaus. If this is the case, give them a call to find out why. Correcting this oversight could provide a significant boost to your score. Also, if you're in very good standing, ask your creditor for a lower rate or higher credit limit. This will increase the gap in the debt you owe versus the credit you have available. Sometimes hinting about closing an account can suddenly bring out the generous spirit of certain card issuers. Give it a try. The worst they can say is no.
Protect Your Interests: Your credit is calculated based solely on the information available to your creditors. If you have a HELOC, make sure it's listed as a mortgage or an installment account on your credit reports and not a revolving debt. If you had a bankruptcy, be sure that all items associated with the bankruptcy are being reported correctly, that is with a zero balance. This action could increase your score by 50-100 points. Because simple mistakes like these can wreak havoc on your credit score, it's important to monitor your credit every four to six months.
Even the Score: If you find information on your credit report that you believe is inaccurate or incomplete, then you have the right to dispute it free of charge. For the fastest results, visit the appropriate credit bureau's website and file a complaint online. If supporting documents are necessary, you have to file your dispute by mail. With just a little bit of effort, you could be well on your way to a higher credit score...and to owning the home of your dreams!
Copyright 2009 All About News, Inc. & You Magazine
Wednesday, July 1, 2009
Florida's quality of life means 'home sweet home'
Florida’s qualify of life means ‘home sweet home,’ says FAR
ORLANDO, Fla., July 1, 2009 – What does Florida have to offer? Pick up a travel brochure and some benefits are clear: Beautiful beaches. Miles of scenic parks and nature preserves. Oceans, rivers and lakes offering boating, fishing, swimming and other water recreation. A rich and varied history, which includes the city of St. Augustine, the oldest permanent European settlement in the mainland United States. Unique entertainment parks and other family-friendly attractions. Cultural activities that offer residents and visitors fine theater, music, dance and arts events. Then there is Florida’s climate featuring an average annual high of 81 degrees Fahrenheit and an average annual low of 60 degrees, giving the Sunshine State its well-known nickname and reputation.
“Florida is a great place to live and I feel privileged to call it home,” said 2009 Florida Association of Realtors® (FAR) President Cynthia Shelton. “There is so much to see, to experience and to enjoy in Florida, from the distinctive white sugar sand beaches of Destin in the north, to the family fun offered by Orlando’s theme parks and attractions, to the leisurely, laid-back lifestyle in the Keys. Whatever you like to do, you’ll find it here in Florida. We have visitors coming here from around the world to vacation in Florida. But they only get to sample what Florida offers for a brief time; when you’re lucky enough to be a Florida homeowner, there’s no end to the possibilities!”
State officials, Florida Realtors® and business recruiters agree: Florida’s unique quality of life is one of the state’s best assets. Enterprise Florida, a public-private partnership devoted to statewide economic development, notes on its Web site (http://www.eflorida.com) many of the amenities found in the Sunshine State.
• Florida beaches were awarded more top 10 spots than any other state, including the No. 1 beach in the U.S., Caladesi Island State Park, on America’s Best Beaches list for 2008. This internationally recognized ranking by Dr. Stephen P. Leatherman (aka Dr. Beach) is based on 50 criteria including number of sunny days, sand softness, algae and pollution content, safety record, and more. Leatherman is a Ph.D. coastal scientist, professor of environmental studies and director of the Laboratory for Coastal Research at Florida International University in Miami.
• The state’s park system, one of the largest in the U.S., has 160 parks covering more than 700,000 acres and 100 miles of Florida’s beaches. • Seven of Relocate-America’s Top 100 Places to Live in 2008 were Florida cities, including one, Flagler Beach, which was named to the Top 10. These rankings attest to Florida’s high quality of life, and are based on a combination of economic data and feedback from people who live in each area.
• In many ways, Florida’s cost of living is below that of other states with similar economic growth and in-migration rates. For example, the state’s homeownership rate currently stands at about 70 percent, well above the national average. And, with data from the Florida Association of Realtors showing that $187,800 was the statewide median price for an existing home at year-end 2008, housing prices compare well to other similar states.
• Noted for its outstanding statewide system of trails, Florida was named the Best Trails State in America, winning the biennial National Trails Award in this past November from the national nonprofit organization American Trails.
• Five Florida universities were named to the Best Values in Public Colleges list for 2009 by Kiplinger’s Personal Finance. The schools are University of Florida, ranking No. 2 in the nation; New College of Florida, No. 8; Florida State University, No. 17; University of Central Florida, No. 42; and the University of South Florida, No. 75. Among other criteria, these rankings recognize schools with top academics and affordable costs.
© 2009 FLORIDA ASSOCIATION OF REALTORS
ORLANDO, Fla., July 1, 2009 – What does Florida have to offer? Pick up a travel brochure and some benefits are clear: Beautiful beaches. Miles of scenic parks and nature preserves. Oceans, rivers and lakes offering boating, fishing, swimming and other water recreation. A rich and varied history, which includes the city of St. Augustine, the oldest permanent European settlement in the mainland United States. Unique entertainment parks and other family-friendly attractions. Cultural activities that offer residents and visitors fine theater, music, dance and arts events. Then there is Florida’s climate featuring an average annual high of 81 degrees Fahrenheit and an average annual low of 60 degrees, giving the Sunshine State its well-known nickname and reputation.
“Florida is a great place to live and I feel privileged to call it home,” said 2009 Florida Association of Realtors® (FAR) President Cynthia Shelton. “There is so much to see, to experience and to enjoy in Florida, from the distinctive white sugar sand beaches of Destin in the north, to the family fun offered by Orlando’s theme parks and attractions, to the leisurely, laid-back lifestyle in the Keys. Whatever you like to do, you’ll find it here in Florida. We have visitors coming here from around the world to vacation in Florida. But they only get to sample what Florida offers for a brief time; when you’re lucky enough to be a Florida homeowner, there’s no end to the possibilities!”
State officials, Florida Realtors® and business recruiters agree: Florida’s unique quality of life is one of the state’s best assets. Enterprise Florida, a public-private partnership devoted to statewide economic development, notes on its Web site (http://www.eflorida.com) many of the amenities found in the Sunshine State.
• Florida beaches were awarded more top 10 spots than any other state, including the No. 1 beach in the U.S., Caladesi Island State Park, on America’s Best Beaches list for 2008. This internationally recognized ranking by Dr. Stephen P. Leatherman (aka Dr. Beach) is based on 50 criteria including number of sunny days, sand softness, algae and pollution content, safety record, and more. Leatherman is a Ph.D. coastal scientist, professor of environmental studies and director of the Laboratory for Coastal Research at Florida International University in Miami.
• The state’s park system, one of the largest in the U.S., has 160 parks covering more than 700,000 acres and 100 miles of Florida’s beaches. • Seven of Relocate-America’s Top 100 Places to Live in 2008 were Florida cities, including one, Flagler Beach, which was named to the Top 10. These rankings attest to Florida’s high quality of life, and are based on a combination of economic data and feedback from people who live in each area.
• In many ways, Florida’s cost of living is below that of other states with similar economic growth and in-migration rates. For example, the state’s homeownership rate currently stands at about 70 percent, well above the national average. And, with data from the Florida Association of Realtors showing that $187,800 was the statewide median price for an existing home at year-end 2008, housing prices compare well to other similar states.
• Noted for its outstanding statewide system of trails, Florida was named the Best Trails State in America, winning the biennial National Trails Award in this past November from the national nonprofit organization American Trails.
• Five Florida universities were named to the Best Values in Public Colleges list for 2009 by Kiplinger’s Personal Finance. The schools are University of Florida, ranking No. 2 in the nation; New College of Florida, No. 8; Florida State University, No. 17; University of Central Florida, No. 42; and the University of South Florida, No. 75. Among other criteria, these rankings recognize schools with top academics and affordable costs.
© 2009 FLORIDA ASSOCIATION OF REALTORS
Tuesday, June 23, 2009
Florida's existing home, condo sales up in May
ORLANDO, Fla. – June 23, 2009 – Florida’s existing home sales rose in May – the ninth month in a row that sales activity increased in the year-to-year comparison, according to the latest housing data released by the Florida Association of Realtors® (FAR). Statewide sales showed gains over the previous month’s sales level in both the existing home and existing condominium markets. Also, for the first time in many months, the statewide median sales price in May for existing homes and for existing condos rose over the previous month’s figure.
Existing home sales rose 16 percent last month with a total of 13,921 homes sold statewide compared to 12,044 homes sold in May 2008, according to FAR. Statewide existing home sales in May increased 6.2 percent over April’s statewide activity. Florida Realtors also reported a 21 percent rise in statewide sales of existing condos in May; existing condo sales last month rose 3.8 percent over the total units sold in April.
“The improving sales of existing single family homes and condos is a trend we have been seeing for several months in Florida. What is new in this month’s data release is that we are seeing evidence of prices beginning to firm,” says Dr. Sean Snaith, director for the University of Central Florida’s Institute for Economic Competitiveness. “While one month of data does not a trend make, it is the first green shoot we have seen in some time as far as prices are concerned. Until prices stop declining, we cannot state with confidence that the housing market has stabilized. Sales have risen to levels we have not seen since 2006, though the economy still faces headwinds. As credit markets begin to thaw this will help speed along this process of recovery in the housing market.”
Thirteen of Florida's metropolitan statistical areas (MSAs) reported increased existing-home sales in May and 13 MSAs also showed gains in condo sales. A majority of the state's MSAs have reported increased sales for 11 consecutive months.
Florida’s median sales price for existing homes last month was $144,400; a year ago, it was $203,800 for a 29 percent decrease. However, the statewide existing home median price in May was higher than the statewide median price reported in each of the previous four months. According to housing industry analysts with the National Association of Realtors® (NAR), sales of foreclosures and other distressed properties continue to lower the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.
The national median sales price for existing single-family homes in April 2009 was $169,800, down 14.9 percent from a year earlier, according to NAR. In California, the statewide median resales price was $256,700 in April; in Massachusetts, it was $275,000; in Maryland, it was $255,587; and in New York, it was $185,000.
According to NAR’s latest housing industry outlook, buyers are responding to favorable market conditions. “The $8,000 first-time buyer tax credit is beginning to impact the market,” said NAR Chief Economist Lawrence Yun. “Since first-time buyers must finalize their purchase by Nov. 30 to get the credit, we expect greater activity in the months ahead and that should spark more sales by repeat buyers.” Many homebuyers are taking advantage of the bargain prices offered on foreclosed listings in states like Florida, California and Nevada, Yun noted, which should “set the stage for healthy market conditions going forward.”
In Florida’s year-to-year comparison for condos, 4,839 units sold statewide compared to 3,998 units in May 2008 for a 21 percent increase. The statewide existing condo median sales price last month was $113,400; in May 2008 it was $181,700 for a 38 percent decrease. May’s statewide existing condo median price was the same as January’s statewide median, and was higher than the median reported in February, March or April. The national median existing condo price was $173,900 in April 2009, according to NAR.
Interest rates for a 30-year fixed-rate mortgage averaged 4.86 percent last month, down significantly from the average rate of 6.04 percent in May 2008, according to Freddie Mac. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Among the state’s smaller markets, the Melbourne-Titusville-Palm Bay MSA reported a total of 584 homes sold in May compared to 491 homes a year ago for a 19 percent increase. The existing home median sales price was $123,700; a year ago, it was $163,100 for a 24 percent decrease. In the year-to-year comparison for the existing condo market, 123 units sold in the MSA last month, up 6 percent compared to 116 condos sold the previous May. The market’s existing condo median price last month was $134,400; a year earlier, it was $144,300 for a 7 percent decrease.© 2009 FLORIDA ASSOCIATION OF REALTORS
Existing home sales rose 16 percent last month with a total of 13,921 homes sold statewide compared to 12,044 homes sold in May 2008, according to FAR. Statewide existing home sales in May increased 6.2 percent over April’s statewide activity. Florida Realtors also reported a 21 percent rise in statewide sales of existing condos in May; existing condo sales last month rose 3.8 percent over the total units sold in April.
“The improving sales of existing single family homes and condos is a trend we have been seeing for several months in Florida. What is new in this month’s data release is that we are seeing evidence of prices beginning to firm,” says Dr. Sean Snaith, director for the University of Central Florida’s Institute for Economic Competitiveness. “While one month of data does not a trend make, it is the first green shoot we have seen in some time as far as prices are concerned. Until prices stop declining, we cannot state with confidence that the housing market has stabilized. Sales have risen to levels we have not seen since 2006, though the economy still faces headwinds. As credit markets begin to thaw this will help speed along this process of recovery in the housing market.”
Thirteen of Florida's metropolitan statistical areas (MSAs) reported increased existing-home sales in May and 13 MSAs also showed gains in condo sales. A majority of the state's MSAs have reported increased sales for 11 consecutive months.
Florida’s median sales price for existing homes last month was $144,400; a year ago, it was $203,800 for a 29 percent decrease. However, the statewide existing home median price in May was higher than the statewide median price reported in each of the previous four months. According to housing industry analysts with the National Association of Realtors® (NAR), sales of foreclosures and other distressed properties continue to lower the median price because they generally sell at a discount relative to traditional homes. The median is the midpoint; half the homes sold for more, half for less.
The national median sales price for existing single-family homes in April 2009 was $169,800, down 14.9 percent from a year earlier, according to NAR. In California, the statewide median resales price was $256,700 in April; in Massachusetts, it was $275,000; in Maryland, it was $255,587; and in New York, it was $185,000.
According to NAR’s latest housing industry outlook, buyers are responding to favorable market conditions. “The $8,000 first-time buyer tax credit is beginning to impact the market,” said NAR Chief Economist Lawrence Yun. “Since first-time buyers must finalize their purchase by Nov. 30 to get the credit, we expect greater activity in the months ahead and that should spark more sales by repeat buyers.” Many homebuyers are taking advantage of the bargain prices offered on foreclosed listings in states like Florida, California and Nevada, Yun noted, which should “set the stage for healthy market conditions going forward.”
In Florida’s year-to-year comparison for condos, 4,839 units sold statewide compared to 3,998 units in May 2008 for a 21 percent increase. The statewide existing condo median sales price last month was $113,400; in May 2008 it was $181,700 for a 38 percent decrease. May’s statewide existing condo median price was the same as January’s statewide median, and was higher than the median reported in February, March or April. The national median existing condo price was $173,900 in April 2009, according to NAR.
Interest rates for a 30-year fixed-rate mortgage averaged 4.86 percent last month, down significantly from the average rate of 6.04 percent in May 2008, according to Freddie Mac. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Among the state’s smaller markets, the Melbourne-Titusville-Palm Bay MSA reported a total of 584 homes sold in May compared to 491 homes a year ago for a 19 percent increase. The existing home median sales price was $123,700; a year ago, it was $163,100 for a 24 percent decrease. In the year-to-year comparison for the existing condo market, 123 units sold in the MSA last month, up 6 percent compared to 116 condos sold the previous May. The market’s existing condo median price last month was $134,400; a year earlier, it was $144,300 for a 7 percent decrease.© 2009 FLORIDA ASSOCIATION OF REALTORS
Friday, June 12, 2009
Educate yourself to cut closing cost
Educate yourself to cut closing costs ORLANDO, Fla. – June 12, 2009 –
Home buyers dicker about appliances, cabinet styles and the move-in date, but often question little when it comes to a pricey part of their purchase.
Closing costs – fees paid at settlement – can add up to thousands of dollars.
Yet, the costs and settlement process are mysterious for many. Half of mortgage applicants in a 2007 Federal Trade Commission study could not identify their loan amount on settlement forms.
How do bewildered buyers figure out what’s supposed to happen and what they should be paying? In many cases, they don’t, or they take the word of the title company and lender.
To make sure you don’t overpay when buying a house, keep in mind that an economical closing begins with a good opening: start preparing early in the house hunt.
Alan Stacy, housing counselor with Consumer Credit Counseling Service of Greater Atlanta, says a dream applicant has her financial paperwork close at hand; boasts a minimum credit score of 720 for a conventional mortgage or 620 for an FHA loan; and has educated herself, perhaps on the Internet, about how mortgages work.
Norm Miller, academic director at the University of San Diego’s Burnham-Moores Center for Real Estate, says the savvy borrower will walk into the mortgage office with paycheck stubs, recent bank statements, two years of tax information and a printout of all savings account numbers, stock account numbers and cash-value insurance accounts.“
I’m going to come in with everything I can to make it easy for the lender,” Miller says. “That’s not only going to speed everything up dramatically, but you’ll probably be considered a more sophisticated buyer, and they’ll be fairly upfront with you.”
Well-versed buyers fare better at the settlement table. A 2008 Urban Institute study showed lenders appeared to make lower-price offers to borrowers who seem more familiar with market terms.
Bart Shapiro, deputy director of the U.S. Department of Housing and Urban Development’s RESPA office, which regulates settlement procedures, advises consumers to:
• Seek advice. Talk with relatives and friends who have gone through the mortgage process.
• Read. Newspapers, books and other media can acquaint you with real estate terms and the local market.
• Go online. Specifically, hit the HUD (www.HUD.gov), Federal Reserve (www.FederalReserve.gov) and Federal Trade Commission (www.FTC.gov) websites. All three offer free guides to mortgage closing costs. Also, check your state’s website for tips. In January, HUD will issue standardized closing forms that will make fees clearer to consumers. In the meantime, buyers should inquire about any fees they don’t understand.
• Shop around. Keep looking until you find a loan provider whose rates and approach you like. “Some folks are old school, and they prefer to do it face to face,” Stacy says. “Other folks use the phone or Internet, because you can work more quickly that way.”
If you’re refinancing, ask your current lender about a “streamline” refinance. Your current lender may not require a credit check, a full appraisal and other services that charge fees. One caveat: Streamlines sometimes carry higher interest rates than you’d get if you start again. Do the math.
Keep asking questions until you feel comfortable, Shapiro says, and don’t sign anything until you feel confident.
Ads for no-cost mortgages are too good to be true: If you see an advertisement that says “no closing costs,” what it means is they’ll finance the closing costs for you, says Miller. “They just mean there’s nothing out of pocket at closing.”
• Search for savings. Mortgage lenders and brokers are required by law to give you a good faith estimate within three days after you apply for a loan. Many will give it to you earlier. The GFE, which lists estimated fees you’ll pay at settlement, is divided into numerical sections. Look in the 800s and 1100s for fees that may be negotiable.
The 800 section lists administrative fees and fees for services your lender contracts for you – everything from checking your credit to appraising your property. Check for double-dipping and inflated fees. If you’re unsure about something, ask questions or request a discount.
There’s some wiggle room for negotiating in the 1100s section. You may be able to whittle hundreds of dollars off your costs by informing your lender upfront that you’ll secure title insurance on your own. You are not legally bound to use the lender’s company, but you should make your intentions clear so they don’t start a title search, too.
• Haggle lightly. While you can quibble about every line item, experts say things will probably go more smoothly if you make it clear that you’re a comparison shopper who is crunching all the numbers.“You want to say the same thing to each lender,” Stacy of Consumer Credit Counseling says. “You want to say, ‘Give me your best numbers. I’m giving you one chance to give me your best-faith estimate.’ “
• Go with your gut. Select a lender or broker you trust, even if the fees are a few dollars higher, because the good faith estimate is just an estimate.“There’s nothing that’s going to happen when you walk into that mortgage office that you can depend on. They can quote anything they want, and there’s no way you can hold them to it,” says Jack Guttentag, a professor emeritus at University of Pennsylvania’s Wharton School who runs The Mortgage Professor website (www.mtgprofessor.com).
• Don’t quit investigating too early. Request a HUD-1 form before settlement day. Federal law requires lenders to give mortgage applicants a copy of their settlement form, called a HUD-1 form, at least one day before closing, if applicants request it. Many lenders won’t provide it until settlement day unless prompted.
Comb your HUD-1 for any numbers that are different from those on your good-faith estimate. Check for accounting errors, too. If you spot discrepancies, accounting errors or new fees, bring them to your lender’s attention.
Copyright 2009 USA TODAY, a division of Gannett Co. Inc., Kathy Canavan.
Home buyers dicker about appliances, cabinet styles and the move-in date, but often question little when it comes to a pricey part of their purchase.
Closing costs – fees paid at settlement – can add up to thousands of dollars.
Yet, the costs and settlement process are mysterious for many. Half of mortgage applicants in a 2007 Federal Trade Commission study could not identify their loan amount on settlement forms.
How do bewildered buyers figure out what’s supposed to happen and what they should be paying? In many cases, they don’t, or they take the word of the title company and lender.
To make sure you don’t overpay when buying a house, keep in mind that an economical closing begins with a good opening: start preparing early in the house hunt.
Alan Stacy, housing counselor with Consumer Credit Counseling Service of Greater Atlanta, says a dream applicant has her financial paperwork close at hand; boasts a minimum credit score of 720 for a conventional mortgage or 620 for an FHA loan; and has educated herself, perhaps on the Internet, about how mortgages work.
Norm Miller, academic director at the University of San Diego’s Burnham-Moores Center for Real Estate, says the savvy borrower will walk into the mortgage office with paycheck stubs, recent bank statements, two years of tax information and a printout of all savings account numbers, stock account numbers and cash-value insurance accounts.“
I’m going to come in with everything I can to make it easy for the lender,” Miller says. “That’s not only going to speed everything up dramatically, but you’ll probably be considered a more sophisticated buyer, and they’ll be fairly upfront with you.”
Well-versed buyers fare better at the settlement table. A 2008 Urban Institute study showed lenders appeared to make lower-price offers to borrowers who seem more familiar with market terms.
Bart Shapiro, deputy director of the U.S. Department of Housing and Urban Development’s RESPA office, which regulates settlement procedures, advises consumers to:
• Seek advice. Talk with relatives and friends who have gone through the mortgage process.
• Read. Newspapers, books and other media can acquaint you with real estate terms and the local market.
• Go online. Specifically, hit the HUD (www.HUD.gov), Federal Reserve (www.FederalReserve.gov) and Federal Trade Commission (www.FTC.gov) websites. All three offer free guides to mortgage closing costs. Also, check your state’s website for tips. In January, HUD will issue standardized closing forms that will make fees clearer to consumers. In the meantime, buyers should inquire about any fees they don’t understand.
• Shop around. Keep looking until you find a loan provider whose rates and approach you like. “Some folks are old school, and they prefer to do it face to face,” Stacy says. “Other folks use the phone or Internet, because you can work more quickly that way.”
If you’re refinancing, ask your current lender about a “streamline” refinance. Your current lender may not require a credit check, a full appraisal and other services that charge fees. One caveat: Streamlines sometimes carry higher interest rates than you’d get if you start again. Do the math.
Keep asking questions until you feel comfortable, Shapiro says, and don’t sign anything until you feel confident.
Ads for no-cost mortgages are too good to be true: If you see an advertisement that says “no closing costs,” what it means is they’ll finance the closing costs for you, says Miller. “They just mean there’s nothing out of pocket at closing.”
• Search for savings. Mortgage lenders and brokers are required by law to give you a good faith estimate within three days after you apply for a loan. Many will give it to you earlier. The GFE, which lists estimated fees you’ll pay at settlement, is divided into numerical sections. Look in the 800s and 1100s for fees that may be negotiable.
The 800 section lists administrative fees and fees for services your lender contracts for you – everything from checking your credit to appraising your property. Check for double-dipping and inflated fees. If you’re unsure about something, ask questions or request a discount.
There’s some wiggle room for negotiating in the 1100s section. You may be able to whittle hundreds of dollars off your costs by informing your lender upfront that you’ll secure title insurance on your own. You are not legally bound to use the lender’s company, but you should make your intentions clear so they don’t start a title search, too.
• Haggle lightly. While you can quibble about every line item, experts say things will probably go more smoothly if you make it clear that you’re a comparison shopper who is crunching all the numbers.“You want to say the same thing to each lender,” Stacy of Consumer Credit Counseling says. “You want to say, ‘Give me your best numbers. I’m giving you one chance to give me your best-faith estimate.’ “
• Go with your gut. Select a lender or broker you trust, even if the fees are a few dollars higher, because the good faith estimate is just an estimate.“There’s nothing that’s going to happen when you walk into that mortgage office that you can depend on. They can quote anything they want, and there’s no way you can hold them to it,” says Jack Guttentag, a professor emeritus at University of Pennsylvania’s Wharton School who runs The Mortgage Professor website (www.mtgprofessor.com).
• Don’t quit investigating too early. Request a HUD-1 form before settlement day. Federal law requires lenders to give mortgage applicants a copy of their settlement form, called a HUD-1 form, at least one day before closing, if applicants request it. Many lenders won’t provide it until settlement day unless prompted.
Comb your HUD-1 for any numbers that are different from those on your good-faith estimate. Check for accounting errors, too. If you spot discrepancies, accounting errors or new fees, bring them to your lender’s attention.
Copyright 2009 USA TODAY, a division of Gannett Co. Inc., Kathy Canavan.
Thursday, May 28, 2009
Florida's existing home, condo sales rise
Florida’s existing home, condo sales rise in April 2009ORLANDO, Fla. – May 27, 2009 – Florida’s existing home sales rose in April – the eighth consecutive month that sales activity increased in the year-to-year comparison, according to the latest housing data released by the Florida Association of Realtors® (FAR). April’s statewide sales showed gains over the previous month’s sales level in both the existing home and existing condominium markets.
Existing home sales rose 18 percent last month with a total of 13,111 homes sold statewide compared to 11,133 homes sold in April 2008, according to FAR. April’s statewide existing home sales were slightly higher than statewide activity in March.
Florida Realtors also reported a 21 percent rise in statewide sales of existing condos in April; existing condo sales last month increased 6.2 percent over the total units sold in March.Fourteen of Florida’s metropolitan statistical areas (MSAs) reported increased existing-home sales in April and 11 MSAs also showed gains in condo sales. A majority of the state’s MSAs have reported increased sales for 10 consecutive months.
Florida’s median sales price for existing homes last month was $138,500; a year ago, it was $199,500 for a 31 percent decrease. Housing industry analysts with the National Association of Realtors® (NAR) note, however, a significant downward distortion in the current median price due to many discounted sales, including a large number of foreclosures. The median is the midpoint; half the homes sold for more, half for less.
The national median sales price for existing single-family homes in March 2009 was $174,900, down 11.5 percent from a year earlier, according to NAR. In California, the statewide median resales price was $253,040 in March; in Massachusetts, it was $255,000; in Maryland, it was $264,302; and in New York, it was $222,500.
According to NAR’s latest housing industry outlook, it could take a few months for the housing market to gain momentum, though there are signs of stabilization. “The share of lower priced home sales has trended up, indicating a return of many first-time buyers,” says NAR Chief Economist Lawrence Yun. “Buyer traffic has been rising, and real estate offices are getting phone inquires about the tax credit. By early summer we should be seeing a positive impact on home sales from record-low mortgage interest rates in addition to the stimulus provisions.”
In Florida’s year-to-year comparison for condos, 4,660 units sold statewide compared to 3,862 units in April 2008 for a 21 percent increase. The statewide existing condo median sales price last month was $106,600; in April 2008 it was $178,900 for a 40 percent decrease. In the latest data available at press time, NAR reported the national median existing condo price was $177,600 in March 2009.
Interest rates for a 30-year fixed-rate mortgage averaged 4.81 percent last month, down significantly from the average rate of 5.92 percent in April 2008, according to Freddie Mac. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Among the state’s smaller markets, the Pensacola MSA reported a total of 316 homes sold in April compared to 272 homes a year ago for a 16 percent increase. The existing home median sales price was $143,300; a year ago, it was $157,400 for a 9 percent decrease. In the year-to-year comparison for the existing condo market, 48 units sold in the MSA last month, up 9 percent compared to 44 condos sold the previous April. The market’s existing condo median price remained level at $250,000.
© 2009 FLORIDA ASSOCIATION OF REALTORS
Existing home sales rose 18 percent last month with a total of 13,111 homes sold statewide compared to 11,133 homes sold in April 2008, according to FAR. April’s statewide existing home sales were slightly higher than statewide activity in March.
Florida Realtors also reported a 21 percent rise in statewide sales of existing condos in April; existing condo sales last month increased 6.2 percent over the total units sold in March.Fourteen of Florida’s metropolitan statistical areas (MSAs) reported increased existing-home sales in April and 11 MSAs also showed gains in condo sales. A majority of the state’s MSAs have reported increased sales for 10 consecutive months.
Florida’s median sales price for existing homes last month was $138,500; a year ago, it was $199,500 for a 31 percent decrease. Housing industry analysts with the National Association of Realtors® (NAR) note, however, a significant downward distortion in the current median price due to many discounted sales, including a large number of foreclosures. The median is the midpoint; half the homes sold for more, half for less.
The national median sales price for existing single-family homes in March 2009 was $174,900, down 11.5 percent from a year earlier, according to NAR. In California, the statewide median resales price was $253,040 in March; in Massachusetts, it was $255,000; in Maryland, it was $264,302; and in New York, it was $222,500.
According to NAR’s latest housing industry outlook, it could take a few months for the housing market to gain momentum, though there are signs of stabilization. “The share of lower priced home sales has trended up, indicating a return of many first-time buyers,” says NAR Chief Economist Lawrence Yun. “Buyer traffic has been rising, and real estate offices are getting phone inquires about the tax credit. By early summer we should be seeing a positive impact on home sales from record-low mortgage interest rates in addition to the stimulus provisions.”
In Florida’s year-to-year comparison for condos, 4,660 units sold statewide compared to 3,862 units in April 2008 for a 21 percent increase. The statewide existing condo median sales price last month was $106,600; in April 2008 it was $178,900 for a 40 percent decrease. In the latest data available at press time, NAR reported the national median existing condo price was $177,600 in March 2009.
Interest rates for a 30-year fixed-rate mortgage averaged 4.81 percent last month, down significantly from the average rate of 5.92 percent in April 2008, according to Freddie Mac. FAR’s sales figures reflect closings, which typically occur 30 to 90 days after sales contracts are written.
Among the state’s smaller markets, the Pensacola MSA reported a total of 316 homes sold in April compared to 272 homes a year ago for a 16 percent increase. The existing home median sales price was $143,300; a year ago, it was $157,400 for a 9 percent decrease. In the year-to-year comparison for the existing condo market, 48 units sold in the MSA last month, up 9 percent compared to 44 condos sold the previous April. The market’s existing condo median price remained level at $250,000.
© 2009 FLORIDA ASSOCIATION OF REALTORS
Tuesday, May 12, 2009
Recession Over? Housing Market Showing Signs of Life
If you want a bone to pick--or an economic argument to have--it should be about when the current recession actually began. The National Bureau of Economic Research, the U.S.'s semi-official recession arbiter, says it started in December 2007. But real gross domestic product grew at a 1% annual rate from then through August 2008. That doesn't look like a recession to us.
Nonetheless, when Lehman Brothers collapsed and the $700-billion TARP plan was proposed, a very rare "panic" ensued. Monetary velocity collapsed. From September 2008 through March 2009, the economy shrank at a rate of 5.5%. That's why we think the recession started in September 2008, not in December 2007.
Once the "real" recession started--the one that began in September--we consistently forecast it would be over by mid-2009, earlier than many (including the Federal Reserve) predicted. Now it looks like our V-shaped recovery is underway. When the NBER eventually gets around to declaring the recession end date, we think it will be May 2009.
New claims for unemployment insurance are probably the very best single indicator of the end of a recession. The monthly average for claims normally peaks one or two months before the economy bottoms--and it appears to have peaked in March, at 658,000, versus April's 635,000.
Also, given that the September recession was marked by consumer spending falling off a cliff, we look at this measure to signal a rebound. Consumer spending grew at a 2.2% annual rate in the first quarter, and it looks set to rise again in the second quarter. Meanwhile, both major measures of consumer confidence (from The Conference Board and University of Michigan) shot upward in April.
The housing market is also showing nascent signs of life. New home sales bottomed in January at a 331,000 annual rate, but the pace of sales in February/March averaged 357,000. After falling 80% from January 2006 to January 2009, the rate of construction of single-family homes has remained essentially unchanged for the past two months, although (thankfully) it is at a level where builders are still rapidly cutting into excess inventories. In all likelihood, a bottom has been reached for both home sales and housing starts.
On the trade front, companies are increasingly willing to do business across borders. Inbound and outbound container traffic is up, at both the port of Los Angeles and the port of Long Beach. This is also a signal that credit conditions are easing, as international trade tends to be more credit-sensitive than domestic commerce.
Other signs of a rebound in monetary velocity can be found in prices. Consumer prices fell at a 12.4% annual rate in the last three months of 2008, the fastest decline since the Great Depression. In the first three months of 2009, however, prices are up at a 2.2% annual rate.
Meanwhile, commodity prices bottomed in February, signaling that the economy has turned a corner. In addition, Treasury bond yields are on the rise despite direct purchases by the Federal Reserve--an indicator that real interest rates have bottomed.
Add to all these signs April's month-to-month jump in the ISM Manufacturing Index--the second largest in the last decade--and recent sharp increases in the Chicago PMI, the Philadelphia Fed Index and the Richmond Fed Index. All show the manufacturing recession is rapidly losing steam.
The end of the recession does not mean we won't lose more jobs; employment is always a lagging indicator. And there will be more defaults, foreclosures and financial market problems too. But none of these are leading indicators.
In our view, there are no more shoes to drop.
Source: Forbes.com
The Recession Is Over
Brian S. Wesbury and Robert Stein 05.05.09, 12:00 AM ET
Nonetheless, when Lehman Brothers collapsed and the $700-billion TARP plan was proposed, a very rare "panic" ensued. Monetary velocity collapsed. From September 2008 through March 2009, the economy shrank at a rate of 5.5%. That's why we think the recession started in September 2008, not in December 2007.
Once the "real" recession started--the one that began in September--we consistently forecast it would be over by mid-2009, earlier than many (including the Federal Reserve) predicted. Now it looks like our V-shaped recovery is underway. When the NBER eventually gets around to declaring the recession end date, we think it will be May 2009.
New claims for unemployment insurance are probably the very best single indicator of the end of a recession. The monthly average for claims normally peaks one or two months before the economy bottoms--and it appears to have peaked in March, at 658,000, versus April's 635,000.
Also, given that the September recession was marked by consumer spending falling off a cliff, we look at this measure to signal a rebound. Consumer spending grew at a 2.2% annual rate in the first quarter, and it looks set to rise again in the second quarter. Meanwhile, both major measures of consumer confidence (from The Conference Board and University of Michigan) shot upward in April.
The housing market is also showing nascent signs of life. New home sales bottomed in January at a 331,000 annual rate, but the pace of sales in February/March averaged 357,000. After falling 80% from January 2006 to January 2009, the rate of construction of single-family homes has remained essentially unchanged for the past two months, although (thankfully) it is at a level where builders are still rapidly cutting into excess inventories. In all likelihood, a bottom has been reached for both home sales and housing starts.
On the trade front, companies are increasingly willing to do business across borders. Inbound and outbound container traffic is up, at both the port of Los Angeles and the port of Long Beach. This is also a signal that credit conditions are easing, as international trade tends to be more credit-sensitive than domestic commerce.
Other signs of a rebound in monetary velocity can be found in prices. Consumer prices fell at a 12.4% annual rate in the last three months of 2008, the fastest decline since the Great Depression. In the first three months of 2009, however, prices are up at a 2.2% annual rate.
Meanwhile, commodity prices bottomed in February, signaling that the economy has turned a corner. In addition, Treasury bond yields are on the rise despite direct purchases by the Federal Reserve--an indicator that real interest rates have bottomed.
Add to all these signs April's month-to-month jump in the ISM Manufacturing Index--the second largest in the last decade--and recent sharp increases in the Chicago PMI, the Philadelphia Fed Index and the Richmond Fed Index. All show the manufacturing recession is rapidly losing steam.
The end of the recession does not mean we won't lose more jobs; employment is always a lagging indicator. And there will be more defaults, foreclosures and financial market problems too. But none of these are leading indicators.
In our view, there are no more shoes to drop.
Source: Forbes.com
The Recession Is Over
Brian S. Wesbury and Robert Stein 05.05.09, 12:00 AM ET
Monday, April 13, 2009
Sanctuary by the Sea 30-A
Along famous scenic corridor 30-A, a Mediterranean oasis awaits your discovery. Situated on a luxurious expanse of 23 pristine acres, a mere 82 residences of uncompromising detail offer glorious views across a rare coastal dune lake and nature preserve to the sparkling Gulf waters beyond. This unique convergence of natural beauty in a secluded setting offers a sanctuary unequaled on Florida’s coast.
Residence Features
• Spacious rooms
• Travertine flooring with sound-mat underlay
• 10’ ceiling heights and 8’ doors
• Elaborate crown and base molding
• Hurricane windows with large-missile impact glazing
• HVAC feature humidity control
• Private, 10’-feet-deep balconies
• Gas fireplace
• Viking® appliances
• Gas-fired range and adjacent pot-filler faucet
• Granite countertops 3cm thick with beveled edges
• Custom-glazed cabinets
• Pre-wire CAT 5 cable
• Gulf and lake views from master bedroom and great room
• Wet bar
• Wine cellar (in some residences)
• Walk-in closet in master bedroom
• Kohler® bathroom fixtures
• Whirlpool® bathtub in master bathroom
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| Sanctuary Floorplan |
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