Average U.S. household deducts $9,650 in mortgage interest
Thirty-five million taxpayers used the home-mortgage deduction in 2003, deducting a total of $338 billion, or an average of $9,650 per household, according to an analysis released on Thursday by the National Association of Home Builders. About 39 million deducted real estate taxes that year, totaling $119 billion in deductions nationwide, or an average of $3,000 per tax filer.
Friday, June 30, 2006
Monday, June 12, 2006
June FED News
TRYING TO SQUASH A RUMOR IS LIKE TRYING TO UNRING A BELL…
meaning once the words are out there, they are out there, and are very hard to recall. And with last week's light news calendar, all ears were straining for any words from the Fed. Chairman Ben Bernanke had wanted a more open, understandable, clear Fed message - and it appears that the Fed Governors and Presidents took that message to heart, leaking their own opinions on the economy and inflation and rate hikes in just about every lecture that they give. And their words have been leading to rampant rumors and speculation in the markets over the Fed's next move due on June 29th - will they hike the Fed Funds Rate yet once again, or will they pause and provide a chance for all the recent hikes to "catch up", and be fully felt in the economy before going any further?
Historically, the Fed always goes too far, especially when there's a new Fed Chair in the house. When Alan Greenspan took over as Chairman in 1987, he felt the need to show he was tough on inflation, and over seven months persistently raised the Fed Funds Rate. And most of us know what happened next…in October of 1987, the stock market crashed, unemployment rates rose and home prices began to decline in many areas of the nation. Bernanke doesn't want to repeat any mistakes his predecessor made…but being under the gun to show that he'll fight inflation, is he destined to repeat past history? He's certainly in the crosshairs of the market - and perhaps he's rethinking all this open, understandable Fed Policy business…it's probably caused him some headaches of late.
meaning once the words are out there, they are out there, and are very hard to recall. And with last week's light news calendar, all ears were straining for any words from the Fed. Chairman Ben Bernanke had wanted a more open, understandable, clear Fed message - and it appears that the Fed Governors and Presidents took that message to heart, leaking their own opinions on the economy and inflation and rate hikes in just about every lecture that they give. And their words have been leading to rampant rumors and speculation in the markets over the Fed's next move due on June 29th - will they hike the Fed Funds Rate yet once again, or will they pause and provide a chance for all the recent hikes to "catch up", and be fully felt in the economy before going any further?
Historically, the Fed always goes too far, especially when there's a new Fed Chair in the house. When Alan Greenspan took over as Chairman in 1987, he felt the need to show he was tough on inflation, and over seven months persistently raised the Fed Funds Rate. And most of us know what happened next…in October of 1987, the stock market crashed, unemployment rates rose and home prices began to decline in many areas of the nation. Bernanke doesn't want to repeat any mistakes his predecessor made…but being under the gun to show that he'll fight inflation, is he destined to repeat past history? He's certainly in the crosshairs of the market - and perhaps he's rethinking all this open, understandable Fed Policy business…it's probably caused him some headaches of late.
Tuesday, May 30, 2006
Apartment rents expected to rise 5%
If you're a renter trying to save for a down payment, or you're just trying to move out of your parents' home, it'll likely get harder this year. Rents are rising faster than they have in six years.
Apartment rents are expected to increase 5.3% this year - about double last year's increase - the National Association of Realtors says. That's the highest jump since 2000, when the Internet boom created lots of jobs for young adults out of college. In April, rising rents were largely to blame for a sharp jump in consumer inflation.
"This is going to be the highest rental increase year since 2000, and it's going to be a broad-based increase in rents, not just limited to a few markets," said Hessam Nadji, who manages research for Marcus & Millichap, a real estate firm in Northern California.
"Renters are already facing higher energy prices and relatively moderate wage growth," Nadji says. "This is going to really squeeze a lot of households."
No one needs to tell Rosa Shephard. The $1,600 rent she pays for a two-bedroom apartment in Laguna Beach, Calif., will rise by $100 a month this Friday. It's a 6.3% increase, and Shephard's salary as an administrative assistant isn't rising as much, so she's trying to find a cheaper place to live.
"I'm trying to find a one-bedroom for $1,200," says Shephard, 53. "It just doesn't exist."
There are four driving forces:
•Job growth. U.S. businesses have generated 4 million new jobs in the past two years. New hires typically look for rental property.
•Rising home prices. From 1980 to 2000, the median price of a home was 12 times higher than the annual average rent. By this spring, it was 21 times higher, Nadji said. The median-priced home now costs $223,000, making the American dream a fantasy for more renters, whose competition for apartments then drives up rents. There's little relief in sight in such areas as Phoenix and South Florida, where home prices soared more than 30% in the first quarter of this year over the same quarter last year.
• Condo conversions. When the housing market was at its blazing peak, many investors who owned apartment buildings kicked out tenants and sold the units as condos. One out of three apartment buildings sold last year were converted into condos for sale. That took 191,400 apartments off the market, according to the NAR. In addition, the number of new apartment buildings under construction is down this year.
• Hurricane Katrina. About half the 100,000 displaced families in the New Orleans area haven't returned. Most of them were renters, says Lawrence Yun, an NAR economist, and "that's putting additional pressure on rental units throughout the country."
Apartment rents are expected to increase 5.3% this year - about double last year's increase - the National Association of Realtors says. That's the highest jump since 2000, when the Internet boom created lots of jobs for young adults out of college. In April, rising rents were largely to blame for a sharp jump in consumer inflation.
"This is going to be the highest rental increase year since 2000, and it's going to be a broad-based increase in rents, not just limited to a few markets," said Hessam Nadji, who manages research for Marcus & Millichap, a real estate firm in Northern California.
"Renters are already facing higher energy prices and relatively moderate wage growth," Nadji says. "This is going to really squeeze a lot of households."
No one needs to tell Rosa Shephard. The $1,600 rent she pays for a two-bedroom apartment in Laguna Beach, Calif., will rise by $100 a month this Friday. It's a 6.3% increase, and Shephard's salary as an administrative assistant isn't rising as much, so she's trying to find a cheaper place to live.
"I'm trying to find a one-bedroom for $1,200," says Shephard, 53. "It just doesn't exist."
There are four driving forces:
•Job growth. U.S. businesses have generated 4 million new jobs in the past two years. New hires typically look for rental property.
•Rising home prices. From 1980 to 2000, the median price of a home was 12 times higher than the annual average rent. By this spring, it was 21 times higher, Nadji said. The median-priced home now costs $223,000, making the American dream a fantasy for more renters, whose competition for apartments then drives up rents. There's little relief in sight in such areas as Phoenix and South Florida, where home prices soared more than 30% in the first quarter of this year over the same quarter last year.
• Condo conversions. When the housing market was at its blazing peak, many investors who owned apartment buildings kicked out tenants and sold the units as condos. One out of three apartment buildings sold last year were converted into condos for sale. That took 191,400 apartments off the market, according to the NAR. In addition, the number of new apartment buildings under construction is down this year.
• Hurricane Katrina. About half the 100,000 displaced families in the New Orleans area haven't returned. Most of them were renters, says Lawrence Yun, an NAR economist, and "that's putting additional pressure on rental units throughout the country."
Friday, May 19, 2006
Boom May Be Over, But Landing Will Be Soft
Boom May Be Over, But Landing Will Be Soft(May 19, 2006) -- WASHINGTON – The five-year boom in home sales may be over, but strong demographics and job growth promise only a short-term slowdown in most U.S. markets, NAR’s Chief Economist David Lereah told REALTORS® at Thursday’s Economic Issues & Residential Real Estate Business Trends Forum. His presentation took place during the 2006 REALTORS® Midyear Legislative Meetings & Trade Expo.
Speculators and rising interest rates have ended the largest acceleration ever in existing-home prices, but the process is “a needed cleansing” that will help restore balance, said Lereah. Nationally, homes appreciated a remarkable 12.5 percent on average in 2005. Appreciation for 2006 will cool to 5.7 percent. But even with the slowdown, 2006 will be the fourth best year ever for residential real estate sales with an estimated 6.62 million existing homes sold, Lereah noted.
In 2007, Lereah expects to see existing-home sales rise slightly to 6.7 million units but appreciation to slow to 4.2 percent. To help the industry track performance, NAR’s Research Department is working to develop a real-time pricing tool, “a real estate ticker,” that will update national average home prices every 15 minutes based on data from MLSs, Lereah told the crowd.
To some degree, the next year or two will be “a tale of two cities,” said Lereah. Cities such as San Diego, Miami, and Naples, Fla., that have seen high price appreciation will see sharp drops in sales. Already, between first quarter 2005 and first quarter 2006, existing-home sales declined by 15 percent to 20 percent in Florida, California, and Arizona, he said.
On the other hand, markets that didn’t see exuberant appreciation during the boom are actually experiencing shorter days on market. Lereah pointed to Charlotte, Dallas, and St. Louis as examples of this trend. Even declining markets should remain healthy as long as they have diversified economies and strong job growth, he said.
“As long as days on the market don’t extend beyond six months, there’s no need to be concerned,” he said. The possible exception might be California, where a high number of adjustable-rate and interest-only mortgage loans might combine with a price downturn to create problems.
Other possible clouds on the real estate horizon: inflation, high oil prices, and rising interest rates. Yet, Lereah said he doesn’t expect a recession. Strong business spending and a sound economy that should grow 3.5 percent in 2006 promise a positive outlook for real estate. And mortgage interest rates should stay low; Lereah said he expects two more rate hikes from the Federal Reserve in 2006, but rates won’t rise above 7 percent for the year.
“The real estate market got ahead of itself, but now we’re going back to fundamentals and a more balanced market,” he concluded.
— By Mariwyn Evans for REALTOR® Magazine Online
Speculators and rising interest rates have ended the largest acceleration ever in existing-home prices, but the process is “a needed cleansing” that will help restore balance, said Lereah. Nationally, homes appreciated a remarkable 12.5 percent on average in 2005. Appreciation for 2006 will cool to 5.7 percent. But even with the slowdown, 2006 will be the fourth best year ever for residential real estate sales with an estimated 6.62 million existing homes sold, Lereah noted.
In 2007, Lereah expects to see existing-home sales rise slightly to 6.7 million units but appreciation to slow to 4.2 percent. To help the industry track performance, NAR’s Research Department is working to develop a real-time pricing tool, “a real estate ticker,” that will update national average home prices every 15 minutes based on data from MLSs, Lereah told the crowd.
To some degree, the next year or two will be “a tale of two cities,” said Lereah. Cities such as San Diego, Miami, and Naples, Fla., that have seen high price appreciation will see sharp drops in sales. Already, between first quarter 2005 and first quarter 2006, existing-home sales declined by 15 percent to 20 percent in Florida, California, and Arizona, he said.
On the other hand, markets that didn’t see exuberant appreciation during the boom are actually experiencing shorter days on market. Lereah pointed to Charlotte, Dallas, and St. Louis as examples of this trend. Even declining markets should remain healthy as long as they have diversified economies and strong job growth, he said.
“As long as days on the market don’t extend beyond six months, there’s no need to be concerned,” he said. The possible exception might be California, where a high number of adjustable-rate and interest-only mortgage loans might combine with a price downturn to create problems.
Other possible clouds on the real estate horizon: inflation, high oil prices, and rising interest rates. Yet, Lereah said he doesn’t expect a recession. Strong business spending and a sound economy that should grow 3.5 percent in 2006 promise a positive outlook for real estate. And mortgage interest rates should stay low; Lereah said he expects two more rate hikes from the Federal Reserve in 2006, but rates won’t rise above 7 percent for the year.
“The real estate market got ahead of itself, but now we’re going back to fundamentals and a more balanced market,” he concluded.
— By Mariwyn Evans for REALTOR® Magazine Online
Thursday, April 13, 2006
Boost Curb Appeal, Add Drama With Lighting
New lighting can enhance curb appeal and update the look of a home without putting a big dent in the owner's pocketbook. Michael Berman, a designer from specialty lighting company Lamps Plus in Chatsworth, Calif., says home sellers often don't think about lighting when preparing for an open house. "But using the proper lighting can make your home stand out to buyers," he says.
Berman offers these tips for brightening up the inside and outside of a home with lighting.
To make interior space seem more spacious, extend the room by adding add outdoor post lights. The lighting will make the yard and patio visible from inside — even when it's dark outside.
Update the look of the kitchen and bathroom, two areas that get lots of attention from buyers. Replace dated fixtures with art glass wall sconces that add splashes of color.
Replace dated lamp shades with something more modern. A new shade of color or design can add color and texture to your space.
Position a torchiere floor lamp or a small spot light at the base of a wall so that the light throw washes up the wall. This emphasizes the height of the room and creates a dramatic visual focal point.
— REALTOR® Magazine Online
Berman offers these tips for brightening up the inside and outside of a home with lighting.
To make interior space seem more spacious, extend the room by adding add outdoor post lights. The lighting will make the yard and patio visible from inside — even when it's dark outside.
Update the look of the kitchen and bathroom, two areas that get lots of attention from buyers. Replace dated fixtures with art glass wall sconces that add splashes of color.
Replace dated lamp shades with something more modern. A new shade of color or design can add color and texture to your space.
Position a torchiere floor lamp or a small spot light at the base of a wall so that the light throw washes up the wall. This emphasizes the height of the room and creates a dramatic visual focal point.
— REALTOR® Magazine Online
Wednesday, April 12, 2006
Housing Market to Stay on High Plateau
WASHINGTON (April 11, 2006) – Home sales should generally level-out and remain at historically high levels, according to the National Association of Realtors®.
David Lereah, NAR’s chief economist, said mortgage interest rates are trending up but will remain favorable. “Economic growth and job creation are providing a favorable backdrop for the housing market, but rising interest rates have an offsetting effect,” Lereah said. “Home sales will move up and down somewhat over the remainder of the year but stay at a high plateau, meaning this will be the third strongest year on record.” He expects the 30-year fixed-rate mortgage to rise to 6.9 percent by the end of the year.
Growth in the U.S. gross domestic product is forecast at 3.7 percent in 2006, while the unemployment rate should average 4.8 percent.
Existing-home sales are projected to drop 6.0 percent to 6.65 million this year from a record 7.08 million in 2005. New-home sales are likely fall 10.9 percent to 1.14 million from the record 1.28 million last year – both sectors would see the third best year following 2005 and 2004. Housing starts are forecast at 2.00 million in 2006, which is 3.2 percent below the 2.07 million in total starts last year.
NAR President Thomas M. Stevens from Vienna, Va., said home prices are expected to cool, but not as much as in earlier projections. “Although housing inventories have been improving, the balance is still a bit more favorable for sellers and annual appreciation remains in double-digit territory,” said Stevens, senior vice president of NRT Inc. “Even so, the market is in a process of normalization – appreciation will return to normal single-digit patterns, providing solid investment returns into the future.”
The national median existing-home price for all housing types is likely to increase 6.4 percent this year to $221,700, while the median new-home price is expected to rise 2.3 percent to $242,700.Inflation as measured by the Consumer Price Index is seen at 3.4 percent in 2006. Inflation-adjusted disposable personal income should grow 3.8 percent this year.The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.2 million members involved in all aspects of the residential and commercial real estate industries.
# # #
When NAR releases March existing-home sales data April 25, it will revise national and regional median existing-home prices back to 1999. The fixed reporting sample of representative multiple listing services has been updated to reflect geographic changes over time so that the monthly samples for regional price measurements are as accurate as possible. The changes in price patterns will be consistent with previously reported data.
David Lereah, NAR’s chief economist, said mortgage interest rates are trending up but will remain favorable. “Economic growth and job creation are providing a favorable backdrop for the housing market, but rising interest rates have an offsetting effect,” Lereah said. “Home sales will move up and down somewhat over the remainder of the year but stay at a high plateau, meaning this will be the third strongest year on record.” He expects the 30-year fixed-rate mortgage to rise to 6.9 percent by the end of the year.
Growth in the U.S. gross domestic product is forecast at 3.7 percent in 2006, while the unemployment rate should average 4.8 percent.
Existing-home sales are projected to drop 6.0 percent to 6.65 million this year from a record 7.08 million in 2005. New-home sales are likely fall 10.9 percent to 1.14 million from the record 1.28 million last year – both sectors would see the third best year following 2005 and 2004. Housing starts are forecast at 2.00 million in 2006, which is 3.2 percent below the 2.07 million in total starts last year.
NAR President Thomas M. Stevens from Vienna, Va., said home prices are expected to cool, but not as much as in earlier projections. “Although housing inventories have been improving, the balance is still a bit more favorable for sellers and annual appreciation remains in double-digit territory,” said Stevens, senior vice president of NRT Inc. “Even so, the market is in a process of normalization – appreciation will return to normal single-digit patterns, providing solid investment returns into the future.”
The national median existing-home price for all housing types is likely to increase 6.4 percent this year to $221,700, while the median new-home price is expected to rise 2.3 percent to $242,700.Inflation as measured by the Consumer Price Index is seen at 3.4 percent in 2006. Inflation-adjusted disposable personal income should grow 3.8 percent this year.The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing more than 1.2 million members involved in all aspects of the residential and commercial real estate industries.
# # #
When NAR releases March existing-home sales data April 25, it will revise national and regional median existing-home prices back to 1999. The fixed reporting sample of representative multiple listing services has been updated to reflect geographic changes over time so that the monthly samples for regional price measurements are as accurate as possible. The changes in price patterns will be consistent with previously reported data.
Monday, April 10, 2006
Pricing your Property more an Art, than a Science
Pricing property can be more art than science in today's market. New home builders probably have the easiest time of it -- at least without shocking the buyers -- because everything is new. There are no bare areas in the carpet, fingerprints on the appliances, nicotine stained ceiling tiles in the rec room -- and definitely no cat and dog odors that are promised to be dealt with by installing new carpet after the buyer moves in.
With resale homes, the first weapon to use in the battle to sell the home is to price it correctly. The challenge for sellers is that they want as much as the last sale, however, in today's market that's not as guaranteed as it was a year ago. The seller can still walk away with hundreds of thousands of dollars in gain, but maybe not the absolute highest amount of gain ever in the community.
Thus, pricing is the key. There are only a few ways to price a home for sale and sellers who don't want to wait around on the sale of their home need to adapt to the accepted modes of pricing and get over the fact that their house may not be worth as much as it was 12 months ago.
The first model is probably the most popular -- the comparable. By pulling up only the sales of your particular model, the Realtor can determine a trend price for your home. The challenge in a slowing market is that your particular model may only have three sales in the last year. Such a low number of houses selling does not really create a trend line, especially if the last sale was 6 months previous. Thus, you turn to the second pricing model.
Your home is then dissected to create comparables across a few neighborhoods or even a whole zip code that match your local community. Several aspects of your home will be plugged into the comparable model: style of home (split level, colonial, etc.); number of levels; number of bedrooms and baths; extra rooms; year built; square footage; and more. Then the averages on these parameters are tabulated and you'll have a target price. Keep in mind to remove the highs and lows.
Finally, another way to price your home is to come up with a tax assessment model. This one takes a little bit more homework and data mining. It's tedious, but it can present one of the most accurate pictures of home values in your community. The first step is to pull up all the sales in the community in the last 6 to 12 months. Tabulate the sales price total (let's say it comes up to $10 million) and then tabulate the tax assessment total (our model will use $8 million). Divide the tax assessment into the sales price and you come up with a tax assessment-sales price ratio. In this case, the community ratio is 1.25. Multiply your tax assessment by the ratio figure, and it will determine your target asking price. For example, if your tax assessment is $250,000, multiply it by 1.25 and you'll arrive at $312,500 as a target asking price. Again, be careful to pull out the anomalies that represent overbuilt properties. The largest, biggest house in the community could affect your price, as well as the pre-foreclosure sale.
You're looking for average prices with average situations for average results.
If you're having to use all three models to arrive at a price, then your real estate professional should weigh in with all three models to determine the price.
The biggest challenge in pricing the home is a seller's greed level. Sorry to be so blunt, but sellers always want more than the last sale, regardless of the market condition. My blunt advice is to "get over it." Waiting around for the "right" buyer is just plain foolishness in the world of real estate. If you're putting your home on the market, don't wait around and waste your time, the buyers' time and the agents' time with an unrealistic asking price.
-Realty Times
With resale homes, the first weapon to use in the battle to sell the home is to price it correctly. The challenge for sellers is that they want as much as the last sale, however, in today's market that's not as guaranteed as it was a year ago. The seller can still walk away with hundreds of thousands of dollars in gain, but maybe not the absolute highest amount of gain ever in the community.
Thus, pricing is the key. There are only a few ways to price a home for sale and sellers who don't want to wait around on the sale of their home need to adapt to the accepted modes of pricing and get over the fact that their house may not be worth as much as it was 12 months ago.
The first model is probably the most popular -- the comparable. By pulling up only the sales of your particular model, the Realtor can determine a trend price for your home. The challenge in a slowing market is that your particular model may only have three sales in the last year. Such a low number of houses selling does not really create a trend line, especially if the last sale was 6 months previous. Thus, you turn to the second pricing model.
Your home is then dissected to create comparables across a few neighborhoods or even a whole zip code that match your local community. Several aspects of your home will be plugged into the comparable model: style of home (split level, colonial, etc.); number of levels; number of bedrooms and baths; extra rooms; year built; square footage; and more. Then the averages on these parameters are tabulated and you'll have a target price. Keep in mind to remove the highs and lows.
Finally, another way to price your home is to come up with a tax assessment model. This one takes a little bit more homework and data mining. It's tedious, but it can present one of the most accurate pictures of home values in your community. The first step is to pull up all the sales in the community in the last 6 to 12 months. Tabulate the sales price total (let's say it comes up to $10 million) and then tabulate the tax assessment total (our model will use $8 million). Divide the tax assessment into the sales price and you come up with a tax assessment-sales price ratio. In this case, the community ratio is 1.25. Multiply your tax assessment by the ratio figure, and it will determine your target asking price. For example, if your tax assessment is $250,000, multiply it by 1.25 and you'll arrive at $312,500 as a target asking price. Again, be careful to pull out the anomalies that represent overbuilt properties. The largest, biggest house in the community could affect your price, as well as the pre-foreclosure sale.
You're looking for average prices with average situations for average results.
If you're having to use all three models to arrive at a price, then your real estate professional should weigh in with all three models to determine the price.
The biggest challenge in pricing the home is a seller's greed level. Sorry to be so blunt, but sellers always want more than the last sale, regardless of the market condition. My blunt advice is to "get over it." Waiting around for the "right" buyer is just plain foolishness in the world of real estate. If you're putting your home on the market, don't wait around and waste your time, the buyers' time and the agents' time with an unrealistic asking price.
-Realty Times
Friday, March 24, 2006
Ways you can lose your home
There are times and ways that people lose their homes through foreclosure or possession. The way many rags-to-riches seekers pursue the quick buck is through the foreclosure sales. Nevertheless, there are several other ways homeowners or investors can lose property. Below are at least six ways a homeowner can lose their property to the auction block.
*Don't pay your mortgage. Generally, quit paying your mortgage and you'll end up getting past due notices, followed by foreclosure proceedings notices and then a visit from the sheriff's office to "assist" you in removing all your property from the household.
While there may appear to be a lot of foreclosures out there, the Mortgage Bankers Association reports that less than 1 percent of mortgages in 2005 went into foreclosure (down 12 basis points from the year before.) However, the number of mortgagees in default rose the last reporting quarter to 4.70 percent.
The increase comes as no surprise to the group's chief economist, Doug Duncan. "We have been expecting an up-tick in delinquencies due to a number of factors: the seasoning of the loan portfolio, the increased shares of the portfolio that are ARMs and subprime mortgages, as well as the elevated level of energy prices and rising interest rates," he said on the group's website.
*Don't pay your taxes. For homeowners who pay their own taxes, (not paid through a mortgage service provider), a tax sale could be in their future if they fail to pay taxes on the property. Though most tax sales are through local governments, both state and federal revenue agencies can confiscate real estate for not paying taxes.
If this happens, it's not as simple as just paying the back taxes and getting your property back. For some, it includes also paying penalties and interest, which many times can bypass the actual amount of the back taxes balance.
If your local taxing jurisdiction is anything like mine here in good old Fairfax County, Virginia, then the confiscation of your home is a last resort -- first they will have tried various other methods of tax collection, such as garnishing wages, confiscated money from your bank, booting and towing your car, then of course, selling your house on the auction block.
*File bankruptcy. In the past, filing bankruptcy usually gave the homeowner some protection from losing his home to creditors. With the revamped bankruptcy laws passed last year, creditors may now have the upper hand in bankruptcy situations, according to Herbert Addison, co-author of "How to Save Your Home" and a certified housing counselor. He contends on ezinearticles.com that while the new law allows for 180 days for the consumer to work out payment plans with the creditor, it does not stop the foreclosure process, which could be a shorter period of time than the payment workout plan.
*Surety for other debts besides mortgage. Creditors are in business for one thing -- to make money off consumers through interest and fees collected during payback of loans. If the consumer fails to pay off those loans, the creditors can go after assets to satisfy the debts. Your house could be one of those assets.
*Failure to pay homeowners dues. If you get into an argument with your homeowners association, withholding the homeowners dues paid each month should not be one of your strategies. HOAs can also auction your house to satisfy past due homeowners HOA fees.
*Illegal activity. The American Civil Liberties Union contends that 80 percent of homeowners who have had property forfeited by the federal, state or local government have never been convicted of a crime, rather law enforcement officials only need to prove probable cause that the homeowner either used the property in committing a crime or purchased the house through funds created through illicit behavior.
(Realty Times)
*Don't pay your mortgage. Generally, quit paying your mortgage and you'll end up getting past due notices, followed by foreclosure proceedings notices and then a visit from the sheriff's office to "assist" you in removing all your property from the household.
While there may appear to be a lot of foreclosures out there, the Mortgage Bankers Association reports that less than 1 percent of mortgages in 2005 went into foreclosure (down 12 basis points from the year before.) However, the number of mortgagees in default rose the last reporting quarter to 4.70 percent.
The increase comes as no surprise to the group's chief economist, Doug Duncan. "We have been expecting an up-tick in delinquencies due to a number of factors: the seasoning of the loan portfolio, the increased shares of the portfolio that are ARMs and subprime mortgages, as well as the elevated level of energy prices and rising interest rates," he said on the group's website.
*Don't pay your taxes. For homeowners who pay their own taxes, (not paid through a mortgage service provider), a tax sale could be in their future if they fail to pay taxes on the property. Though most tax sales are through local governments, both state and federal revenue agencies can confiscate real estate for not paying taxes.
If this happens, it's not as simple as just paying the back taxes and getting your property back. For some, it includes also paying penalties and interest, which many times can bypass the actual amount of the back taxes balance.
If your local taxing jurisdiction is anything like mine here in good old Fairfax County, Virginia, then the confiscation of your home is a last resort -- first they will have tried various other methods of tax collection, such as garnishing wages, confiscated money from your bank, booting and towing your car, then of course, selling your house on the auction block.
*File bankruptcy. In the past, filing bankruptcy usually gave the homeowner some protection from losing his home to creditors. With the revamped bankruptcy laws passed last year, creditors may now have the upper hand in bankruptcy situations, according to Herbert Addison, co-author of "How to Save Your Home" and a certified housing counselor. He contends on ezinearticles.com that while the new law allows for 180 days for the consumer to work out payment plans with the creditor, it does not stop the foreclosure process, which could be a shorter period of time than the payment workout plan.
*Surety for other debts besides mortgage. Creditors are in business for one thing -- to make money off consumers through interest and fees collected during payback of loans. If the consumer fails to pay off those loans, the creditors can go after assets to satisfy the debts. Your house could be one of those assets.
*Failure to pay homeowners dues. If you get into an argument with your homeowners association, withholding the homeowners dues paid each month should not be one of your strategies. HOAs can also auction your house to satisfy past due homeowners HOA fees.
*Illegal activity. The American Civil Liberties Union contends that 80 percent of homeowners who have had property forfeited by the federal, state or local government have never been convicted of a crime, rather law enforcement officials only need to prove probable cause that the homeowner either used the property in committing a crime or purchased the house through funds created through illicit behavior.
(Realty Times)
Thursday, March 16, 2006
Why St. Patrick's Day Is Important To Americans
Green beer and buckled hats aside, St. Patrick's Day is not a bank holiday, but most Americans celebrate it with gusto anyway. What is St. Patrick's Day and what does it mean to Americans? Here are some ideas, courtesy of research by the U.S. Census.
March is Irish-American Heritage Month, and March 17 is St. Patrick's Day. He was the saint who introduced Christianity to Ireland in the fifth century, and March 17 is the day that St. Patrick is believed to have died.
The day is chosen for many Americans to celebrate their Irish lineage, and although it isn't an official federal holiday, many communities participate in the fun with parades and other celebrations. The reason? About 34.5 million U.S. residents claim Irish ancestry (roughly nine times the population of Ireland itself (4.1 million.)
Here are some of other facts for your "Top 'o the mornin'":
Nearly one in four (24 percent) Massachusetts residents claim Irish ancestry -- about double the national percentage. (Source: American FactFinder)
In three states, Delaware, Massachusetts and New Hampshire, Irish is the leading ancestry. The number one ancestry named by U.S.residents is German. Irish is among the top-five ancestries in every state but two (Hawaii and New Mexico). (Source: U.S. Census)
About 25,870 U.S. residents speak Irish Gaelic at home (Source: U.S. Census)
There are about 128,000 U.S. residents who were born in Ireland, excluding people living in group quarters. (Source: American FactFinder)
Since 1820, the earliest year for which official immigration records exist, there have been 4.8 million Irish immigrants lawfully admitted to the United States for permanent residence. By fiscal year 1870, about half of these immigrants were admitted for lawful permanent residence. Only Germany, Mexico, Italy and the United Kingdom have had more immigrants admitted for permanent residence to the United States than Ireland. (Source: Department of Homeland Security Table 1)
Four places in the United States are named Shamrock, the floral emblem of Ireland. Mount Gay-Shamrock, W.Va., and Shamrock, Texas, were the most populous, with 2,623 and 1,821 residents, respectively. Shamrock Lakes, Ind., had 162 residents and Shamrock, Okla., 126. (Statistic for Mount Gay-Shamrock is from Census 2000; the other statistics in this paragraph are 2004 estimates.) (Source: American FactFinder and Census.gov)
Nine U.S. burbs are named after Dublin, the capital of Ireland. Since Census 2000, Dublin, Calif., has surpassed Dublin,Ohio, as the most populous of these places (36,995 compared with 34,301, respectively, as of July 1, 2004). (Source: American FactFinder and Census.gov)
Corned beef and cabbage is a traditional St. Patrick's Day dish. The corned beef celebrants dine on may very well have originated in Texas, which produced 7.3 billion pounds worth of beef, while the cabbage most likely came from California, which produced 558 million pounds worth. In 2004, the U.S. produced 41.5 billion & 2.5 billion U.S. beef and cabbage production, respectively, in pounds. (Source USDA)
On St. Patrick's Day, you may be able to order green-dyed beer at one of the nation's 48,050 drinking places, some of which may be Irish pubs. See Table 201, Statistical Abstract of the United States: 2006 .
About 93.3 million people planned to wear green last St. Patrick's Day.(Source: National Retail Federation, via Hallmark.)
March is Irish-American Heritage Month, and March 17 is St. Patrick's Day. He was the saint who introduced Christianity to Ireland in the fifth century, and March 17 is the day that St. Patrick is believed to have died.
The day is chosen for many Americans to celebrate their Irish lineage, and although it isn't an official federal holiday, many communities participate in the fun with parades and other celebrations. The reason? About 34.5 million U.S. residents claim Irish ancestry (roughly nine times the population of Ireland itself (4.1 million.)
Here are some of other facts for your "Top 'o the mornin'":
Nearly one in four (24 percent) Massachusetts residents claim Irish ancestry -- about double the national percentage. (Source: American FactFinder)
In three states, Delaware, Massachusetts and New Hampshire, Irish is the leading ancestry. The number one ancestry named by U.S.residents is German. Irish is among the top-five ancestries in every state but two (Hawaii and New Mexico). (Source: U.S. Census)
About 25,870 U.S. residents speak Irish Gaelic at home (Source: U.S. Census)
There are about 128,000 U.S. residents who were born in Ireland, excluding people living in group quarters. (Source: American FactFinder)
Since 1820, the earliest year for which official immigration records exist, there have been 4.8 million Irish immigrants lawfully admitted to the United States for permanent residence. By fiscal year 1870, about half of these immigrants were admitted for lawful permanent residence. Only Germany, Mexico, Italy and the United Kingdom have had more immigrants admitted for permanent residence to the United States than Ireland. (Source: Department of Homeland Security Table 1)
Four places in the United States are named Shamrock, the floral emblem of Ireland. Mount Gay-Shamrock, W.Va., and Shamrock, Texas, were the most populous, with 2,623 and 1,821 residents, respectively. Shamrock Lakes, Ind., had 162 residents and Shamrock, Okla., 126. (Statistic for Mount Gay-Shamrock is from Census 2000; the other statistics in this paragraph are 2004 estimates.) (Source: American FactFinder and Census.gov)
Nine U.S. burbs are named after Dublin, the capital of Ireland. Since Census 2000, Dublin, Calif., has surpassed Dublin,Ohio, as the most populous of these places (36,995 compared with 34,301, respectively, as of July 1, 2004). (Source: American FactFinder and Census.gov)
Corned beef and cabbage is a traditional St. Patrick's Day dish. The corned beef celebrants dine on may very well have originated in Texas, which produced 7.3 billion pounds worth of beef, while the cabbage most likely came from California, which produced 558 million pounds worth. In 2004, the U.S. produced 41.5 billion & 2.5 billion U.S. beef and cabbage production, respectively, in pounds. (Source USDA)
On St. Patrick's Day, you may be able to order green-dyed beer at one of the nation's 48,050 drinking places, some of which may be Irish pubs. See Table 201, Statistical Abstract of the United States: 2006 .
About 93.3 million people planned to wear green last St. Patrick's Day.(Source: National Retail Federation, via Hallmark.)
Monday, March 13, 2006
Selling your home in a shifting market
March 2006
The bidding wars are dying down. Cat fights, heartbreaking personal letters and other strategies employed by desperate buyers are fading into the past. While a freakishly warm winter in the Midwest and East has kept sales hotter than we'd expect to see in January, there have been plenty of signs that things are cooling down. Most economists expect sales of existing homes as well as new construction to sink from last year's record levels. Mix in rising interest rates, and things may start to look grim to anyone pondering a home sale.
But this doesn't mean you have to stay put. You may just need to work a little harder to reel in your buyer. Fortunately, there are plenty of creative, crafty, and just plain logical things you can do to help your home look exceptionally appealing in an inventory-heavy market.
Make a good first impressionYou want potential buyers to fall in love with your home the instant they pull up in front, which is why curb appeal is everything. It's absolutely vital that the yard is immaculate, the flowerbeds are fresh, and the garbage cans are nowhere in sight. Little improvements make a big difference. Freshen up paint, and buy a new welcome mat, doorknocker, and mailbox.
Get lostWhen an agent calls to say they're bringing someone over to see the house, get out. Take a walk, do an errand, get a cup of coffee, twiddle your thumbs, whatever it takes. When the owner is in the home, potential buyers feel uncomfortable exploring and asking questions, and will likely cut their visit short. While you may desperately want to provide a guided tour, listing all of the wonderful things about the house and improvements you've made, that's the agent's job.
De-clutterYou have too much stuff in your house. We're sure of it. We're not just talking about those jeans that haven't fit since college. We're talking big stuff, too. Thinning out furniture will make the home look larger and brighter. Get rid of extra chairs, messy bookshelves, unnecessary end tables, and anything else you can shake loose.
Donate or discard everything you don't need any more, and store the rest in a kindly neighbor's garage, if possible (don't put it in yours—that's what we call cluttershifting, and it doesn't fool anyone). If you need to, rent a storage unit.
De-stinkA less-than-pleasant odor—or really any odor at all—can make your home an instant no-thank-you. If you smoke, do it outside. If you have pets, take them with you during showings. Clean litter boxes religiously. Even the idea of animals is enough to make some buyers flinch.
Throw in a perkEven a small freebie can turn a ''looky-loo'' into an ''offer-loo,'' and make them feel really good about the deal they're getting. In the long run, it's sure to cost you less than the stigma of having your home sit on the market another month. While you'll want to work with your agent on the details, here are a few ideas to get you started:
Got a large yard? Offer to cover your buyer's landscaping fees for a year.
Kitchen hopelessly dated? Have a kitchen designer draw up some plans, and place them in a notebook on the kitchen counter. Provide a ''get started'' bonus for the remodel.
Moving to a smaller home, or one with a different configuration? Grab the opportunity to be generous with your existing furniture. If you won't need that gigantic dining room set in your new place, leave it behind.
While nobody knows exactly what the market will do, those mythic folks in the know feel fairly confident that we're headed for a dose of reality. But an impending slowdown doesn't mean you can't get a fair, or even favorable, price for your home. A little ingenuity, mixed with a bit of elbow grease can put you on the road to a successful sale.
(Courtesy of Washington Mutual)
The bidding wars are dying down. Cat fights, heartbreaking personal letters and other strategies employed by desperate buyers are fading into the past. While a freakishly warm winter in the Midwest and East has kept sales hotter than we'd expect to see in January, there have been plenty of signs that things are cooling down. Most economists expect sales of existing homes as well as new construction to sink from last year's record levels. Mix in rising interest rates, and things may start to look grim to anyone pondering a home sale.
But this doesn't mean you have to stay put. You may just need to work a little harder to reel in your buyer. Fortunately, there are plenty of creative, crafty, and just plain logical things you can do to help your home look exceptionally appealing in an inventory-heavy market.
Make a good first impressionYou want potential buyers to fall in love with your home the instant they pull up in front, which is why curb appeal is everything. It's absolutely vital that the yard is immaculate, the flowerbeds are fresh, and the garbage cans are nowhere in sight. Little improvements make a big difference. Freshen up paint, and buy a new welcome mat, doorknocker, and mailbox.
Get lostWhen an agent calls to say they're bringing someone over to see the house, get out. Take a walk, do an errand, get a cup of coffee, twiddle your thumbs, whatever it takes. When the owner is in the home, potential buyers feel uncomfortable exploring and asking questions, and will likely cut their visit short. While you may desperately want to provide a guided tour, listing all of the wonderful things about the house and improvements you've made, that's the agent's job.
De-clutterYou have too much stuff in your house. We're sure of it. We're not just talking about those jeans that haven't fit since college. We're talking big stuff, too. Thinning out furniture will make the home look larger and brighter. Get rid of extra chairs, messy bookshelves, unnecessary end tables, and anything else you can shake loose.
Donate or discard everything you don't need any more, and store the rest in a kindly neighbor's garage, if possible (don't put it in yours—that's what we call cluttershifting, and it doesn't fool anyone). If you need to, rent a storage unit.
De-stinkA less-than-pleasant odor—or really any odor at all—can make your home an instant no-thank-you. If you smoke, do it outside. If you have pets, take them with you during showings. Clean litter boxes religiously. Even the idea of animals is enough to make some buyers flinch.
Throw in a perkEven a small freebie can turn a ''looky-loo'' into an ''offer-loo,'' and make them feel really good about the deal they're getting. In the long run, it's sure to cost you less than the stigma of having your home sit on the market another month. While you'll want to work with your agent on the details, here are a few ideas to get you started:
Got a large yard? Offer to cover your buyer's landscaping fees for a year.
Kitchen hopelessly dated? Have a kitchen designer draw up some plans, and place them in a notebook on the kitchen counter. Provide a ''get started'' bonus for the remodel.
Moving to a smaller home, or one with a different configuration? Grab the opportunity to be generous with your existing furniture. If you won't need that gigantic dining room set in your new place, leave it behind.
While nobody knows exactly what the market will do, those mythic folks in the know feel fairly confident that we're headed for a dose of reality. But an impending slowdown doesn't mean you can't get a fair, or even favorable, price for your home. A little ingenuity, mixed with a bit of elbow grease can put you on the road to a successful sale.
(Courtesy of Washington Mutual)
Thursday, March 09, 2006
Homeowners anticipate further home price appreciation
HOMEOWNERS ANTICIPATE FURTHER HOME PRICE APPRECIATION
Americans believe home prices will continue rising in the coming years, according to a recent "Los Angeles Times"/Bloomberg poll. Nearly 50 percent of respondents believe their home values will increase by 5 to 15 percent in the next three years, while 25 percent expect home prices to rise 16 percent or more over the same period. "I think the 'bubble' talk is hyped," said Diane Harvey of Foster City, Calif., one of the participants in the poll.
Though the majority of respondents showed optimism about future home price growth, the poll revealed some concern about the impact of rising mortgage interest rates on adjustable-rate mortgages. Roughly one in seven respondents have an adjustable-rate mortgage, and more than 25 percent stated they are "not too confident" or "not at all confident" about their ability to make their mortgage payments if adjusted higher.
The "Los Angeles Times"/Bloomberg poll also found that 16 percent of respondents had tapped into their home equity in the last two years. Completing home improvements, paying off other debts, and buying new cars were among the top uses for the cash obtained.
Americans believe home prices will continue rising in the coming years, according to a recent "Los Angeles Times"/Bloomberg poll. Nearly 50 percent of respondents believe their home values will increase by 5 to 15 percent in the next three years, while 25 percent expect home prices to rise 16 percent or more over the same period. "I think the 'bubble' talk is hyped," said Diane Harvey of Foster City, Calif., one of the participants in the poll.
Though the majority of respondents showed optimism about future home price growth, the poll revealed some concern about the impact of rising mortgage interest rates on adjustable-rate mortgages. Roughly one in seven respondents have an adjustable-rate mortgage, and more than 25 percent stated they are "not too confident" or "not at all confident" about their ability to make their mortgage payments if adjusted higher.
The "Los Angeles Times"/Bloomberg poll also found that 16 percent of respondents had tapped into their home equity in the last two years. Completing home improvements, paying off other debts, and buying new cars were among the top uses for the cash obtained.
Monday, February 27, 2006
Home Repair Scams
Fight Back: Home Repair Scams
Elderly low-income seniors long have been a favored target among home repair scam artists, who sell unnecessary and overpriced "home improvements" and even go so far as to attach liens to the homes of seniors who refuse to pay for shoddy or incomplete work, according to the National Consumer Law Center. Seniors can protect themselves from unscrupulous contractors by following these tips:
Never purchase home improvement services from a door-to-door contractor or on the basis of a television commercial.
Always get a second estimate for the same job from another contractor before you sign a contract for work to be performed.
Always get a written contract or estimate that describes the job, the price, the hourly rate for any additional work and the contractor's clean-up responsibilities.
Get references and call them.
Visit other job sites to review work previously preformed by the contractor.
Watch out for bait-and-switch tactics and shady financing schemes.
Source: National Consumer Law Center
Elderly low-income seniors long have been a favored target among home repair scam artists, who sell unnecessary and overpriced "home improvements" and even go so far as to attach liens to the homes of seniors who refuse to pay for shoddy or incomplete work, according to the National Consumer Law Center. Seniors can protect themselves from unscrupulous contractors by following these tips:
Never purchase home improvement services from a door-to-door contractor or on the basis of a television commercial.
Always get a second estimate for the same job from another contractor before you sign a contract for work to be performed.
Always get a written contract or estimate that describes the job, the price, the hourly rate for any additional work and the contractor's clean-up responsibilities.
Get references and call them.
Visit other job sites to review work previously preformed by the contractor.
Watch out for bait-and-switch tactics and shady financing schemes.
Source: National Consumer Law Center
Thursday, February 23, 2006
REMODELING ACTIVITY SLOWS
REMODELING ACTIVITY SLOWS
With rising interest rates curbing refinancing activities, which homeowners often use to fund remodeling projects, the remodeling market slowed during the fourth quarter of 2005, according to the National Association of Home Builders' Remodeling Market Index (RMI). For the first time since the first quarter of 2003, the RMI components dipped below 50; indices above 50 indicate more remodelers view market conditions as good versus poor.
During the fourth quarter of 2005, the current market conditions component, based on existing home additions, alterations and repairs being completed, declined 4.3 points to 46.6, while the future expectations index, determined by factors such as the amount of work committed for the next three months and the backlog of remodeling jobs, slipped to 47.5 from 51.8. Regionally, the West reported the strongest remodeling activity with the current and future RMI components increasing to 58.5 and 63.5, respectively. Remodeling activity declined in the South, Northeast, and Midwest regions.
With rising interest rates curbing refinancing activities, which homeowners often use to fund remodeling projects, the remodeling market slowed during the fourth quarter of 2005, according to the National Association of Home Builders' Remodeling Market Index (RMI). For the first time since the first quarter of 2003, the RMI components dipped below 50; indices above 50 indicate more remodelers view market conditions as good versus poor.
During the fourth quarter of 2005, the current market conditions component, based on existing home additions, alterations and repairs being completed, declined 4.3 points to 46.6, while the future expectations index, determined by factors such as the amount of work committed for the next three months and the backlog of remodeling jobs, slipped to 47.5 from 51.8. Regionally, the West reported the strongest remodeling activity with the current and future RMI components increasing to 58.5 and 63.5, respectively. Remodeling activity declined in the South, Northeast, and Midwest regions.
LEADING INDEX SIGNALS ECONOMIC GROWTH IN THE NEAR TERM
LEADING INDEX SIGNALS ECONOMIC GROWTH IN THE NEAR TERM
The U.S. leading index rose for the fourth consecutive month in January, increasing 1.1 percent to 140.1 (1996=100), The Conference Board recently reported. Six of the 10 indicators composing the leading index rose in December, including initial claims for unemployment insurance, real money supply, building permits, vendor performance, stock prices and interest rate spread. A key barometer of economic conditions, the leading index has increased in five of the last six months, suggesting economic growth is "likely to pick up in the near term," according to the report.The coincident and lagging indices, which reflect current and past economic activity, respectively, also increased in January. The coincident index edged up 0.2 percent to 121.7, while the lagging index rose 0.7 percent to 122.8.
The U.S. leading index rose for the fourth consecutive month in January, increasing 1.1 percent to 140.1 (1996=100), The Conference Board recently reported. Six of the 10 indicators composing the leading index rose in December, including initial claims for unemployment insurance, real money supply, building permits, vendor performance, stock prices and interest rate spread. A key barometer of economic conditions, the leading index has increased in five of the last six months, suggesting economic growth is "likely to pick up in the near term," according to the report.The coincident and lagging indices, which reflect current and past economic activity, respectively, also increased in January. The coincident index edged up 0.2 percent to 121.7, while the lagging index rose 0.7 percent to 122.8.
Wednesday, February 08, 2006
30-year U.S. Treasury bonds - why is it coming back now and who wants it.
**The last sales of 30-year bonds, known as the "long bond," were made in August 2001. On Oct, 31, 2001, then-Treasury Under Secretary Peter Fisher announced: "We do not need the 30-year bond to meet the government's current financing needs, nor those that we expect to face in the coming years."
**At the time, Treasury was stepping up its short-term borrowing in the wake of Sept. 11, 2001, terror attacks that had deepened an economic downturn and helped wipe out a brief period of budget surpluses. But Treasury maintained it did not need the bond because it felt the long-term budget outlook was strong.
**Since then, U.S. budget deficits have continued to soar as wars in Afghanistan and Iraq and relief to hurricane-hit U.S. Gulf Coast states have climbed, leading to a projected $423 billion deficit for fiscal 2006 ending Sept. 30. On May 4, 2005, Treasury said it was considering bringing the long bond back to give it a broader borrowing range. "We're doing this, really, because times have changed," said Treasury Assistant Secretary Timothy Bitsberger.
**Sales of 30-year bonds started in 1977 to create a very low-risk debt instrument. The bond became a risk-free gold standard by which much private-sector debt was priced. While the size of auctions shrank in the late 1990s and the early part of this decade, making it less of a benchmark for setting other interest rates, it is still highly prized by investors ranging from individuals to pension funds that want or need it to add certainty to long-term planning.
**At the time, Treasury was stepping up its short-term borrowing in the wake of Sept. 11, 2001, terror attacks that had deepened an economic downturn and helped wipe out a brief period of budget surpluses. But Treasury maintained it did not need the bond because it felt the long-term budget outlook was strong.
**Since then, U.S. budget deficits have continued to soar as wars in Afghanistan and Iraq and relief to hurricane-hit U.S. Gulf Coast states have climbed, leading to a projected $423 billion deficit for fiscal 2006 ending Sept. 30. On May 4, 2005, Treasury said it was considering bringing the long bond back to give it a broader borrowing range. "We're doing this, really, because times have changed," said Treasury Assistant Secretary Timothy Bitsberger.
**Sales of 30-year bonds started in 1977 to create a very low-risk debt instrument. The bond became a risk-free gold standard by which much private-sector debt was priced. While the size of auctions shrank in the late 1990s and the early part of this decade, making it less of a benchmark for setting other interest rates, it is still highly prized by investors ranging from individuals to pension funds that want or need it to add certainty to long-term planning.
Monday, February 06, 2006
30 Year bond is back after 5 years.
After nearly a 5-year hiatus, the United States Department of the Treasury will reintroduce 30-year Treasury Bonds. On February 9th, 2006 the Long Bond will be up for auction. But many interest rate followers are fearful that the added supply of paper will cause overall bond prices to decline and home loan rates to rise. Are those fears justified? Let’s take a closer look.
Bonds are essentially a form of debt and are sold by companies and governments to raise money. In turn, an investor who purchases bonds receives a return on the investment in the form of interest payments. For example, let’s say the city where you live is proposing to build a new sports stadium but does not have the funds available for construction. They sell bonds in order to raise the funds needed.
The same goes for the government. When the government is in need of funds, they offer bonds to investors and pay interest over the life of the bond. The US uses Treasury Bills (maturity of 1-year or less), Notes (maturity of more than 1-year up to 10-years) and Bonds (maturity greater than 10-years) to raise cash.
Back in October of 2001, the US government suspended issuance of 30-year bonds due to a budget surplus. However, since 2001 the government has undergone many expenses (e.g., funding of the war in Iraq, and increased costs for Medicare and Medicaid) that require additional funding via sales of Treasury securities.
So, will the reintroduction of the long bond push home loan rates higher? Not materially. The reintroduction of the 30-year bonds was announced in August 2005 and it is likely that the market has already reflected this news. The amount to be auctioned is $14 Billion dollars…sounds like a lot, but a relatively small amount that should be easily absorbed. And even if rates blipped higher, it should be temporary.
Bonds are essentially a form of debt and are sold by companies and governments to raise money. In turn, an investor who purchases bonds receives a return on the investment in the form of interest payments. For example, let’s say the city where you live is proposing to build a new sports stadium but does not have the funds available for construction. They sell bonds in order to raise the funds needed.
The same goes for the government. When the government is in need of funds, they offer bonds to investors and pay interest over the life of the bond. The US uses Treasury Bills (maturity of 1-year or less), Notes (maturity of more than 1-year up to 10-years) and Bonds (maturity greater than 10-years) to raise cash.
Back in October of 2001, the US government suspended issuance of 30-year bonds due to a budget surplus. However, since 2001 the government has undergone many expenses (e.g., funding of the war in Iraq, and increased costs for Medicare and Medicaid) that require additional funding via sales of Treasury securities.
So, will the reintroduction of the long bond push home loan rates higher? Not materially. The reintroduction of the 30-year bonds was announced in August 2005 and it is likely that the market has already reflected this news. The amount to be auctioned is $14 Billion dollars…sounds like a lot, but a relatively small amount that should be easily absorbed. And even if rates blipped higher, it should be temporary.
Thursday, February 02, 2006
Fed raised Fed Funds rate
The Federal Open Market Committee decided today to raise its target for the federal funds rate by 25 basis points to 4-1/2 percent.
Tuesday, January 24, 2006
The Appraisal Process
The appraisal process often baffles consumers. They may feel their home is worth a higher dollar amount, and the appraised value doesn't always make sense to them. It is important to know that appraisal guidelines are dictated by the lenders, and in some states, it is a requirement to also disclose what the appraisal will be used for because there are different rules to follow depending on the purpose.
In effect, lender guidelines force appraisers to put a fair market value on homes based on comparable sales in the same area, and the home must be bracketed in size and value. For example, there is no set dollar figure associated with a great view, pool, spa, bathroom upgrades, etc. If a homeowner installs a custom pool that cost them $30,000, but the local marketplace supports the value of a pool at $15,000, then that item will be bracketed as [$15,000] on the appraisal.
Upgrades can usually be expressed at full value in newer homes, because the only way to get those upgrades was to put more money into the cost of building the home. On the other hand, the upgrading or remodeling of an older home is rarely reflected in full in the final appraisal. This is because the home had value in its original condition, and again, the value of the upgrades must be supported by comparable examples within the same marketplace.
These comparisons must be drawn from current market activity within the last six months, and some lenders will want to look at both closed and pending sales, to see if there is any room for negotiation. This is a safeguard to prevent appraisers from attaching too high a value to the home in question. This guideline further states that appraisers can only base their opinion on the value of homes that have actually closed escrow. Any supporting comparison from pending sales will reinforce the reference to the closed sale given.
However, when property values are increasing drastically within a marketplace, the appraiser is generally permitted to make a concession and put more weight on the evidence provided by comparisons to pending sales and listings, allowing for a “real time” appraisal.
Although there is no formal standard to speak of, most lenders give the appraiser a 5% margin of error. If the file is reviewed and the appraiser is off by 8%, there is a good chance the value will be cut by the full 8%. It is in the best interest of both the appraiser and the homeowner not to try to push the value up higher than the market will support, otherwise the property evaluation would then be exposed to a severe appraisal review.
Provides by James Gill, a senior loan executive with Peninsula Mortgage 310 375-6456
In effect, lender guidelines force appraisers to put a fair market value on homes based on comparable sales in the same area, and the home must be bracketed in size and value. For example, there is no set dollar figure associated with a great view, pool, spa, bathroom upgrades, etc. If a homeowner installs a custom pool that cost them $30,000, but the local marketplace supports the value of a pool at $15,000, then that item will be bracketed as [$15,000] on the appraisal.
Upgrades can usually be expressed at full value in newer homes, because the only way to get those upgrades was to put more money into the cost of building the home. On the other hand, the upgrading or remodeling of an older home is rarely reflected in full in the final appraisal. This is because the home had value in its original condition, and again, the value of the upgrades must be supported by comparable examples within the same marketplace.
These comparisons must be drawn from current market activity within the last six months, and some lenders will want to look at both closed and pending sales, to see if there is any room for negotiation. This is a safeguard to prevent appraisers from attaching too high a value to the home in question. This guideline further states that appraisers can only base their opinion on the value of homes that have actually closed escrow. Any supporting comparison from pending sales will reinforce the reference to the closed sale given.
However, when property values are increasing drastically within a marketplace, the appraiser is generally permitted to make a concession and put more weight on the evidence provided by comparisons to pending sales and listings, allowing for a “real time” appraisal.
Although there is no formal standard to speak of, most lenders give the appraiser a 5% margin of error. If the file is reviewed and the appraiser is off by 8%, there is a good chance the value will be cut by the full 8%. It is in the best interest of both the appraiser and the homeowner not to try to push the value up higher than the market will support, otherwise the property evaluation would then be exposed to a severe appraisal review.
Provides by James Gill, a senior loan executive with Peninsula Mortgage 310 375-6456
Friday, January 20, 2006
Reverse Mortgages
This was an interesting article from "Market Watch"The number of Americans over age 65 is expected to double in the next 30 years to 70 million. And those older Americans will be living longer. But with one of the lowest savings rates in the world, just what will they live on?
In the years to come, more and more retirees are likely to be looking to tap one of their largest assets to get by financially -- their home equity. Reverse mortgages are one option they might consider.
In the years to come, more and more retirees are likely to be looking to tap one of their largest assets to get by financially -- their home equity. Reverse mortgages are one option they might consider.
Wednesday, January 18, 2006
Good Heating system advice
Experts advise that you hire a licensed professional to give your home heating and cooling systems the once over at least once a year.
When properly maintained, home heating systems are not only safer, but work more efficiently to help offset the rising costs of fuel. Clean, efficient systems also last longer.
When properly maintained, home heating systems are not only safer, but work more efficiently to help offset the rising costs of fuel. Clean, efficient systems also last longer.
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