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If you’re buying a house with a limited-lifespan-left-on-the-roof , be prepared  for a hiccup or two. As far as roof insurance goes: If the home you’re buying has less than a year’s ‘life’ left on the roof, getting insurance may be virtually impossible.  With 2-5 years of life left on the roof,   your insurance company may or may not write a policy for you, depending on who that insurance carrier [...]

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Filed under: News, Economy

How much residents of each state owe on their mortgages is an interesting statistic. For the most part, residents of the states with the highest average mortgage debt are not in trouble. While the average home price in these states dropped in value during the recession, the foreclosure rates in these states are among the lowest in the country. The reason: Residents of these states can generally afford to lose and owe more money than their counterparts in other states. (Click the gallery below to see the full list.)

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24/7 Wall St. examined a recent report by Credit Karma to find the 10 states with the highest average mortgage debt. Most of the states on our list have extremely high mortgage debt because of the size of their initial mortgages. States like Connecticut and Massachusetts, which have among the highest median home values in the U.S., also have among the highest mortgage debt. Hawaii, which has the second-highest average mortgage debt per person, has the highest median home value of $525,400.

Many of the states on the list also experienced the steepest declines in home value during the recession. Home prices in seven of the states with the highest mortgage debt declined during the recession. In states like California and Nevada, properties lost more than 30 percent of their value. Even in states like New Jersey and Maryland, which fared relatively well during the recession, homes lost between 7 percent and 10 percent of their value.

Sharp declines in home values, coupled with high mortgage debt, should translate to financial disaster. However, while home values dropped more than 7 percent in Maryland, Massachusetts and New Jersey — states where mortgage debt is the highest — foreclosure rates stayed low.

Meanwhile, states with the lowest median home value and relatively high mortgage debt tend to have the highest foreclosure rates. Illinois, Michigan and Florida all have median home values below the national average and relatively high mortgage debt compared to housing prices in the state. These states also have among the highest foreclosure rates in the country.

More from 24/7 Wall St.:
10 Cities Crushed by the Global Recession
Americans Want Federal Aid for Housing, But Lack Ideas
Worst Cities for Retirees to Find Work

Also see:
Report: Foreclosures Down, But Discounts Abound
New Home Sales 2011: Worst Year on Record

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Source: http://realestate.aol.com/blog/2012/01/27/10-states-with-the-most-mortgage-debt/

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Filed under: Advice, Buying, Financing, Home Equity, Investing, Refinancing

Not that long ago, people bought one house and stayed put in it. After 30 years, they owned it free and clear, and this was a good thing, so went the thinking. Some folks celebrated with a mortgage-burning party, where they took a match to their mortgage papers and rejoiced.

Then along came the housing boom years, and the thinking changed. Only fools stayed put in one loan, let alone in one house. The pressure was on to buy bigger houses and/or refinance into even lower-rate loans; who cared if those lower rates lasted 90 days, let alone 30 years? Anyone who couldn’t keep pace would find themselves priced out of the housing market forever, we were told.

Well, forever came and went pretty quick.

Today, as people look to trim expenses and reduce household debt, you may be wondering whether to remain in the 30-year club or pay off your mortgage early if you can. The answer depends on many factors, including your stage of life and how strong a tolerance you have for its uncertainties.

Broadly speaking, experts say you should consider paying off your mortgage if:

• You are nearing retirement.
• You expect to stay in your house for at least several more years.
• You have enough liquidity from other investments to handle emergencies.

Let’s take a closer look at each of those considerations.

Retiring

Having a mortgage is a great tax deduction. But if you don’t have much taxable income — the largest taxable income is likely your paycheck — you may not need that deduction once you retire.

The other side of this coin is that if you won’t have income, it might be nice to not worry about paying for your shelter each month. Remember that you’ll still have property taxes, home upkeep and maintenance and, if you live in a condo, an HOA fee.

Deciding factor: Check with your accountant and determine the impact on your taxes of paying off your loan early.

Staying Put in Your House

This is a factor that depends on your age, health and family situation. Is your house suitable for you to age in place?

Things to consider are whether there are stairs, a bedroom on the ground floor, and room for a live-in caregiver should you need one. Is it near good health care and convenient for shopping? Close to family, friends and the activities you enjoy? If you anticipate limiting your driving, is the house in a location where you can get around by public transportation?

Deciding factor: The decision to move is one that can be made at any point; you don’t need to make it on the day of your retirement party. And as such, you also don’t need to rush to pay off your loan that day either.

Liquidity

You presumably have considerable cash reserves if you’re contemplating paying off your loan. Would investing that money elsewhere serve your interests better?

If you took the money you would use to pay off the mortgage and instead invested it in your 401(k) or IRA, would you get a better rate? “Use the money to build wealth,” said Wayne Bogosian, president of the PFE Group and the co-author of “The Complete Idiot’s Guide to 401(k) Plans.”

By paying off your mortgage, you are taking a highly liquid asset — your cash — and converting it into something far less liquid — home equity. Once your money is tied up in equity, the only way to get at it is through a home equity loan. In other words, the bank will charge you to use your money.

Deciding factor: Do you really have enough cash in your emergency fund and have fully funded your retirement? If not, save the match or find something besides your mortgage to burn with it.

For more insight on mortgages and related topics see these AOL Real Estate guides:

• Mortgage Jargon in Simple Terms
• How to Get a Low Mortgage Rate
  
• When to Refinance
• Four Ways to Benefit From a Cash-In Refinance

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Get property tax help from our experts.

 

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Source: http://realestate.aol.com/blog/2011/06/23/pay-off-your-mortgage-early-it-depends/

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Filed under: News, Advice, Economy, Financing, Refinancing, Selling, Credit

“Why won’t the bank just reduce the amount of my loan instead of taking my home and then selling it to someone else for way less than I would have been happy to pay?” It’s a question that gets asked repeatedly these days, especially by people who are facing foreclosure or are upside down on their mortgages.

For the answer, we turned to Jack Guttentag, the Mortgage Professor and Inman columnist.

Guttentag believes that lenders have been too stingy when it comes to reducing loan balances. Private lenders have offered loan reductions only sparingly, he says, and Fannie Mae and Freddie Mac not at all.

Here’s the professor’s take on why homeowners can’t catch a break on loan reductions.

1. The buck stops there.

The decisions to reduce principal loan amounts are made by the firms that service mortgages — the same folks who brought the country the robo-signing scandal. As servicing firms, anything they decide must be in the financial interest of their client — that’s your lender, not you. If they depart from customary practice — and writing down loan balances is a departure from customary practice — the buck stops with them, Guttentag says. In other words, who’s going to take the risk of reducing Joe Homeowner’s loan amount and then have to explain it to the boss? To take Nancy Reagan out of context: They just say no.

2. Banks are in the business of making money.

No lender is going to write down the balance of a loan in default just because you owe more than the home is worth. Truth is, there is no benefit to the lender to helping Joe Homeowner keep his house instead of selling it to the next guy. Plus, to help Joe would eliminate the possibility that the bank could also get a deficiency judgment against him. Banks are in this for the squeeze and think of Joe as just the orange. Nothing personal, of course.

3. In this economy, you will likely default anyway.

Sure, you want to believe that the economy is going to turn around and the value of your home will again rise to what you paid for it. After all, hasn’t listening to a fairy tale been a surefire way to fall asleep?

From the lender’s standpoint, the only reason to write down a loan balance is that it will reduce the chance that you will default. And evidence has shown that people who are heavily underwater — that’s deep in negative equity territory — are more likely to default than those who aren’t. Truth is, negative equity discourages people from making their mortgage payments. They figure: Why keep throwing good money after bad?

4. Banks are short-staffed and the staff they do have is untrained.

Most interactions between mortgage borrowers and servicers are handled by computers or relatively unskilled employees, says Guttentag. Borrowers in serious trouble are referred to a smaller number of more skilled and specialized employees, but until you enter the red zone, you are likely to encounter frustration.

Guttentag says that at the onset of the mortgage crisis, servicers were caught short-handed and the sheer volume of foreclosures in the pipeline hasn’t allowed them to catch their breath.

5. Mortgage insurance works against you.

When mortgages carrying mortgage insurance go to foreclosure, banks are protected up to the maximum coverage of the policy, which generally is enough to cover all or most of the loss. This discourages modifications, says Guttentag. Why would a bank do a modification for $15,000 if the $40,000 foreclosure cost is going to be paid by the mortgage insurer? Even if the insurance coverage falls short of the foreclosure cost, the shortfall has to exceed the modification cost before modification becomes financially more attractive.

So there you have it. A five-point plan for keeping homeowners on the hook for that hefty loan balance.

Also see:
Viewpoint: Where’s Housing in the ‘Occupy’ Protests?
Mortgage Mod Hell: Trapped Between Lenders, Collectors
The Mortgage Fix That Can Save the Economy

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Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Find homes for rent in your area.

 

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Source: http://realestate.aol.com/blog/2011/10/18/mortgage-prof-why-banks-foreclose-instead-of-settling-for-les/

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There are a few things just as frustrating as looking for a new home: dating, car shopping and job searching. When it comes time to look for a new place to live, the options seem endless and nothing seems to fit your budget, needs and wants. It would be wonderful to go home hunting if [...]

Source: http://www.brothernwla.org/the-benefits-of-new-homes-for-sale/

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Filed under: News, Economy, Financing

WASHINGTON — Congressional bargainers have agreed to increase the size of mortgages insured by the Federal Housing Administration in a compromise being hailed by the housing industry but criticized by conservatives.

Under the deal by House and Senate negotiators, the FHA would be able to insure mortgages worth up to $729,750 in the most expensive regions of the U.S. for the next two years. The ceiling had been raised to that level during the financial crisis, but by law it dipped down to $625,500 on Oct. 1.

However, in a bow to conservatives, the bargainers would not increase the current $625,500 limit on mortgages that can be backed in expensive communities by Fannie Mae and Freddie Mac, the government-controlled mortgage giants, and by the Veterans Affairs Department.

Realtors and home builders had lobbied hard to raise the loan limits for all four entities, arguing that the last thing the country’s stubbornly weak housing market needs is stricter limits on government-backed mortgages. They were backed by members of Congress of both parties from areas where housing costs are high, like Southern California and New York.

“We’d have liked broader language, but the FHA is still an important part of the puzzle,” Jamie Gregory, a lobbyist with the National Association of Realtors, said Tuesday.

‘Beyond Ridiculous’

Conservatives and a majority of House Republicans oppose the increase, saying the government should reduce its involvement in subsidizing housing in hopes that the private market would step up.

In a written statement, the president of the conservative Club for Growth called increasing FHA’s loan limits “beyond ridiculous” and said his group would note how lawmakers vote on the issue when they rate members of Congress seeking re-election. He said raising the limits does the opposite of reducing the federal role in housing markets — something that many conservatives and the Obama administration say they want to strengthen the private market and protect federal taxpayers.

It has so far cost the government about $170 billion to rescue Fannie and Freddie, which nearly collapsed in 2008 because of risky loans in their portfolios.

The size of loans that federal agencies can back is based on a formula that includes a region’s median housing cost. More than a fifth of the country’s roughly 3,100 counties would be affected by the higher FHA loan limits.

Helping Buyers With Small Down Payments

FHA insurance is often used by buyers who put down small down payments. The agency has insured more than 40 million homes since it was established in 1934, and last year three quarters of those it insured were first-time buyers.

“It’s good news for the more than 600 counties that faced loan limit decline,” said Robert Dietz, an economist for the National Association of Home Builders. “FHA is important for first-time homebuyers, so that will help support housing demand.”

The provision was included in a bill financing the departments of Housing and Urban Affairs, Commerce, Justice, Transportation and several other agencies for the rest of the government’s fiscal year, which began Oct. 1. It would also keep all other federal agencies functioning through Dec. 16 as lawmakers continue working on permanent spending bills.

The Democratic-run Senate had voted to increase the loan limits in its housing bill, but the version approved by the Republican-led House left the ceilings alone.

The House and Senate are expected to approve the overall compromise legislation later this week.

Also see:
Fannie, Freddie Execs Score $100 Million in Bonuses
Community Rescues Vet From Foreclosure After TV Story Airs

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Source: http://realestate.aol.com/blog/2011/11/16/fha-mortgage-loan-limits-to-rise-again/

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Filed under: News, Advice, Financing

Pay more now for a chance to save much more later? That’s the idea behind paying “points” on a mortgage loan. But it doesn’t necessarily make sense for every homeowner.

Mortgage points provide an opportunity for borrowers to lower their monthly mortgage payments by paying a lump sum at a loan’s closing in exchange for a lower mortgage interest rate over the course of a loan.

Mortgage points are a smart option for borrowers who plan to stay in the same mortgage and not refinance for a relatively long period of time. But points are not recommended for borrowers who are likely to relocate or refinance in the not-so-distant future.

Borrowers pay points in order to lower their mortgage interest rates by a certain amount. The cost of one point is equal to one percent of the mortgage amount. In the case of a 30-year fixed-rate mortgage, paying one point will typically lower your interest rate by somewhere around one eighth of a percent, according to Tim Dwyer, chief executive officer of Entitle Direct, a title insurance company.

So if borrower A paid one point on a $200,000 mortgage with what would have been a 4 percent interest rate, she would lower her interest rate to 3.875 percent (4 percent — 1/8th percent) for the cost of $2,000.

A good way of looking at points is to view them as an investment that “yields a return for the longer you stay in your house,” mortgage expert Jack Guttentag writes.

If Borrower A stays in the same mortgage for only a few years before selling her home or refinancing, she may end up not saving enough in monthly payments to justify paying the $2,000 upfront. But if she stays in the mortgage for a longer period of time, she eventually breaks even on her investment and enjoys saving money every month from there on out.

“If the points are reasonable, I want to pay that upfront and enjoy the interest rate savings over 10 years because I know I’m not going to refinance,” Dwyer says. But if “you’re a young couple” and “you know you’re going to have more babies, you know you’re going to be moving out,” then you should avoid paying points.

Banks may offer 10 or more point combinations on any given loan, Guttentag writes, and borrowers often don’t end up selecting the option that aligns most with their interests, simply out of ignorance. You can use a point calculator to find out how long it would take to break even using different point combinations.

In a perfect world, borrowers would pay points only if it benefited them in the long run. But, in fact, many borrowers pay points out of necessity. Why?

Lenders will only allow borrowers’ monthly mortgage payments to equal up to a certain percentage of their monthly income. Often they will only approve loans for borrowers whose monthly mortgage payments would not exceed 28 percent of a borrower’s monthly income.

Paying points allows a borrower who otherwise wouldn’t qualify for a loan because of income limitations to lower his or her monthly payment to the extent that the bank is willing to make the loan.

Some banks offer “negative points,” a rebate paid by lenders toward a borrower’s closing costs. “Negative points” lower closing costs for a mortgage, but raise its monthly interest rate. They can be a good option for borrowers who are hard-pressed to cover closing costs with zero points or who intend on moving or refinancing in a few years.

See also:
Mortgage Jargon in Simple Terms
Real Estate Terms and What They Mean
Don’t Be Surprised by Expenses of Homeownship

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
See celebrity real estate.

 

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Source: http://realestate.aol.com/blog/2012/05/16/mortgage-points-pay-more-upfront-to-lower-your-interest-rate/

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Filed under: News, Advice, Foreclosures, Investing, Lifestyle

AOL Real Estate asked Utah-based real estate investors Doug Clark and Mike Bard, whose show “Flip Men” premieres this week on Spike TV, for tips on how to flip a foreclosed home. Here’s what they had to say to novice investors:

1. Pick a property that is well within your means.

Don’t allow yourself to get too overextended on the property. Way too often, we have seen people show up at a foreclosure auction and then after one bad deal, their own house is in foreclosure. Everything will take more time and money then you anticipate, so don’t bite off more then you can chew.

2. Prepare to break in.

Foreclosed homes don’t come with keys or contracts. It is up to you to find a way in. Our favorite methods are: Slip the lock with a credit card, lift a window, lift the garage, put your hand through a doggy door and unlock the door from within, climb on the roof and look for an open window.

Get creative and have fun with this step! If you want a set of keys to your new property you need to make your own or call a locksmith and pay $150 to get the job done. Make sure you research the local laws regarding abandoned property. You may have to store any items you find in the house for a period of time before they are yours. Former owners almost never come back for their items, so it’s not out of the question to find cash, furniture, collectibles, firearms and even vehicles.

3. Check everything.

Most foreclosures were abandoned. These homes have many issues, so check all the systems thoroughly. The last thing you want is to find out that the roof is bad or the furnace needs to be replaced the day before closing.

A great tip: Speak to the neighbors. You would not believe how much they know about the houses around them. Don’t avoid disclosing bad news with the house, because the people you sell to will notice everything. Budget for contingency items because they are always there, especially in foreclosures.

4. Tour other houses for sale.

Take an afternoon and tour two or three homes similar to the one you hope to flip. This is your direct competition, so view it that way. How is the curb appeal, paint colors, smell, clutter, layout, backyard, etc. This is especially important if you are new to the business and don’t have the same reference points that a professional flipper does.

5. Price aggressively.

It’s easy to overprice a listing, it’s difficult to under-price one. If you under-price the property, you will get a lot of attention and showings fast, and people will compete for the house. Set the price to move. If you are not getting showings and no one is calling to see the house, then it is priced too high. If you are getting a lot of attention and people are walking through but no offers are being made, then the price is right, but there is something wrong with the house. Call the agent for details and don’t be afraid to ask why the buyers are passing on your house.

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Also see:
Mansion or Meth House? Flip Men Want to Know
Viewpoint: Feeling Guilty About Buying a Foreclosure?
‘Mortgage Prof’: 5 Reasons Banks Would Rather Foreclose
Tempted to Invest in Real Estate? Read This First

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Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.

 

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Source: http://realestate.aol.com/blog/2011/10/25/5-foreclosure-flip-tips-from-the-flip-men/

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There are times when we need an extra space for our need. However, we do not have enough money to buy a new place. This way we need to rent place. Of course, there are many things that we need to consider when we are renting a place. Often we encounter that renting a place [...]

Source: http://www.brothernwla.org/renting-is-easy/

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Filed under: News, Economy, Financing

NEW YORK — If the U.S. economy does not suffer more setbacks, the rate of mortgage holders behind on their payments should decline significantly by the end of next year, according to credit reporting agency TransUnion.

Mortgage delinquency rates — the ratio of borrowers 60 or more days behind on their payments — will likely tick up to about 6 percent through the first three months of 2012, TransUnion said in its annual delinquency forecast issued Wednesday.

But by the end of next year, it could drop to 5 percent, TransUnion said. That’s well off the peak of 6.89 percent seen in the fourth quarter of 2009.

Chicago-based TransUnion’s forecast takes into consideration several factors, including expectations that consumer confidence and the economy will improve next year.

Also, banks are expected to get a good portion of pending foreclosures off their books next year, said Charlie Wise, TransUnion director of research and consulting.

Slowed by Foreclosures

Banks are still working through a backlog of foreclosures created by issues including the robo-signing scandal, in which bank officials signed mortgage documents without verifying the information they contained. The issue surfaced last year in areas with large numbers of foreclosures, and banks had to backtrack and review foreclosures across the country to make sure their paperwork was in order.

That slowed down the process, Wise said, and left mortgages listed as delinquent for longer than they otherwise might have been, temporarily boosting delinquency rates.

Economic uncertainty has also contributed. In the third quarter of 2011, mortgage delinquencies saw their first uptick in six quarters, largely fueled by concerns over the economy as lawmakers were debating the U.S. debt ceiling and Europe’s debt crisis was unfolding.

Helping to cut the mortgage delinquency rate are a slowly improving job market and a stabilizing housing market.

While the drop will be significant, the rate will remain well above the pre-recession average of 1.5 to 2 percent.

“We have a long way to go to get back,” said Steven Chaouki, a TransUnion vice president.

The situation with credit cards is much stronger. Card delinquencies — payments late by 90 days or more — dropped to their lowest levels in 17 years during the spring, then saw a slight increase in the third quarter, but still remained near historic lows.

TransUnion expects further edging up in the current quarter and the first three months of 2012, but then late payments on bank-issued cards should fall again.

Credit Still Tight

One reason card delinquencies are expected to remain so low is that credit is much tighter than it was before the recession. TransUnion data showed that nearly a quarter million new card accounts were opened by people with less-than-stellar credit scores during the third quarter, which contributed to the slight increase in late payments during the summer months. But banks are mainly still going after consumers with top-tier credit histories.

“Lenders are willing to lend, but are still pursuing the best customers,” said Chaouki.

TransUnion predicts by the end of 2012, just 0.69 percent of cards will be considered delinquent, down from a predicted 0.74 percent in the current quarter. The rate has wobbled in the last few years, peaking at 1.36 percent in the fourth quarter of 2007, then dropping and bouncing back up to 1.32 percent in the first quarter of 2009.

The figures reflect a shift in which debt payments consumers consider most important, largely because home prices fell so far.

Chaouki said the conventional wisdom before the Great Recession was that homeowners would put their mortgages first because of concern about their reputation and the emotional attachment involved in owning a home. But what has become clear as housing prices have continued to fall, he said, is that bill payment is far more practical.

“People were protecting their home equity,” he said. Credit cards were relatively easy to come by in years past, he said, so when money got tight, it was an easy decision to default on cards and maintain house payments. Now it’s common to owe more on a mortgage than a house is actually worth, but credit cards are harder to get. So consumers are being practical and protecting what is more valuable to them.

He said he expects the equation will shift again if housing prices rebound and people go back to building home equity.

Copyright 2011 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

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See also:
Detroit Mom Trades $96,000 House for Used Minivan
Fannie and Freddie Freeze Foreclosures for the Holidays
Viewpoint: Is the Housing Crisis Just a State of Mind?

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Finds homes for rent in your area.

 

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Source: http://realestate.aol.com/blog/2011/12/07/mortgage-delinquency-to-drop-sharply-in-2012-report-says/

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Filed under: News, Buying, Credit

As U.S. regulators fool with the idea that homebuyers should put 20 percent down on home purchases, they need only look across the sea to see what happen when a similar plan was put in place in Hong Kong recently: Sales at 10 of the island-nation’s largest home developments fell almost 60 percent the week after the government raised the minimum down payments and deposits for foreign buyers.

Anyone need further proof that requiring $60,000 cash to buy a $300,000 house is going to further dent buyer enthusiasm? At least in Hong Kong, the measure was intended to slow the pace of sales — something we surely don’t need more of here. The Hong Kong government has made several attempts to curb the inflation of home values, including raising mortgage interest rates. This most recent measure was aimed specifically at foreign buyers; about a third of luxury home transactions in the first quarter of this year came from overseas or mainland China.

But the results do provide a good indicator of what the U.S. housing market can expect if the 20 percent rule — part of the 376 pages of proposed changes known as the Qualified Residential Mortgages package or QRM — kicks in: Buyers go away.

The proposal made this spring by a group of federal agencies would require a 20 percent down payment, limit to one-third a borrower’s debt payment and extend the most-favorable loan rates to only those with excellent credit. Regulators reason that if borrowers had to put down 20 percent of the home’s value, they would have more “skin in the game” and be less likely to walk away from the loan.Perhaps what they didn’t reason was that just fewer people would be able to buy a house. Public reaction to the 20 percent down requirement was swift, and negative; public comment was extended to Aug. 1.

“If we require 20 percent down payments to get a loan, we will ensure broad swaths of working- and middle-class people will not be able to get a loan,” John Taylor, chief executive of the National Community Reinvestment Coalition, told the Washington Post. The NCRC advocates an extension of credit to low- and moderate-income borrowers.

The QRM is an overreaction to the mortgage crisis caused primarily by toxic loans — the so-called “liar loans” and optional adjustable rate mortgages that put people into homes they couldn’t afford, said David Berenbaum, Chief Program Officer for the NCRC. The default rate for 30-year fixed rate loans has been less than one percent, regardless of the size of the down payment. And of all the loans written in 2009, only 30.5 percent would have met the new proposed standards.

For more insight on mortgages these AOL Real Estate guides:

• Mortgage Jargon in Simple Terms
• How to Get a Low Mortgage Rate
• Want a Mortgage? Don’t Make These 8 Mistakes

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Get property tax help from our experts.

 

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Source: http://realestate.aol.com/blog/2011/06/14/require-20-down-on-a-house-hong-kong-tried-that/

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Filed under: News, Advice, Home Equity, Investing

While paying down the mortgage is undoubtedly one of the largest financial burdens many Americans have to contend with, it’s certainly not the only long-term investment homeowners need to consider. This is particularly true for homeowners nearing their 60s, for whom financial investments made today can have a lasting impact on their post-retirement income. Our sister site, DailyFinance, addresses this issue in the latest entry of their “Ask the Expert” video series with Regina Lewis.

For 57-year-old Ed, a homeowner nearing the end of his fixed-rate mortgage, the decision to pay off his debt early or begin investing his money elsewhere can make a real difference in just how far his savings will take him. Read his full question, and Regina’s video response, below.

Ed asks: I am 57 years old with a couple more years to work before I retire. I currently have an equity mortgage on my home with $30,000. The house payment is less than $100 a month. I pay $1,100 a month toward the loan. Here is my question. Should I be paying minimal on my mortgage and putting the rest in my 401(k) and hopefully make money on that money, or would you pay the house off by continuing to pay the accelerated payment to get it paid off as quickly as possible? What is my smartest move? I think I know, but want to hear a professional’s point of view.

And to ask the DailyFinance team your own personal finance question, add your comments here.

For more insight on mortgages and refinancing see these AOL Real Estate guides:

• Mortgage Jargon in Simple Terms
• How to Get a Low Mortgage Rate
  
• When to Refinance
• Four Ways to Benefit From a Cash-In Refinance

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.

 

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Source: http://realestate.aol.com/blog/2011/07/13/watch-when-to-pay-off-the-mortgage-early/

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Filed under: Foreclosures

Foreclosures have increased 14% between the second and third quarter of 2011, following five straight quarters where the number of foreclosures has gone down. This increase could dampen the recovery of the American housing market and harm economic recovery for cities where foreclosures rose significantly. Based on data recently released by RealtyTrac, 24/7 Wall St. has identified the 10 metropolitan regions where foreclosures increased by more than 30%.

The housing crisis that began half a decade ago is the cause of most of the foreclosures, even today. The bubble did not burst at the same time across the country. Many of the cities on this list were among the first to be hit. Eight out of the 10 metropolitan areas listed reached a peak median home value in the first quarter of 2006, after which they started declining. Most regions peaked toward the end of 2006, into 2007. This means the regions listed here have been declining longer than the rest of the country.

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Because home values have been dropping in these areas longer than most other markets, they have generally also fallen further. In half of the regions on this list house prices have declined 50% or more since their peak. Home values in the Cape Coral-Fort Myers area, where foreclosures increased over 35%, have dropped by nearly 60% since the beginning of 2006, the seventh-greatest decline among any region in the U.S.

With a few exceptions, most of the cities listed are full of financially distressed and underwater homeowners – those whose homes are worth less than their mortgages. Six of the cities on this list are among the 20 cities with the largest portion of underwater homeowners. In the case of Fairfield-Vallejo, Florida, 53% of homes are in this position.

24/7 Wall St. used a RealtyTrac’s press release on quarterly rates to identify the 10 cities where foreclosures had increased the most between the second and third quarter of 2011. To illustrate other economic factors at play in these regions, we used unemployment rates from the Bureau of Labor Statistics and home price changes and median family incomes from Fiserv. Finally, 24/7 Wall St. also looked data from Corelogic on the cities with the highest percent of homes with underwater mortgages.

Most of these cities have high unemployment rates, low median family income and falling home values. These three forces combined suggest that foreclosures are likely to get even worse in these areas before they get better.

Click through the gallery to see the 10 cities where foreclosure rates are skyrocketing.

Also see:
‘Mortgage Prof’: 5 Reasons Banks Would Rather Foreclose
The Mortgage Fix That Can Save the Economy
5 Foreclosure Flip Tips From the ‘Flip Men’

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Find rentals in your area.

 

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Source: http://realestate.aol.com/blog/2011/11/11/ten-cities-getting-slammed-by-foreclosures/

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Filed under: Credit

If you have a credit score at 620 — generally considered the dividing line between good and bad credit — boosting it by 20 points could save you thousands of dollars on your mortgage. And there are simple ways to do this in a short time. An analysis of about 300,000 loan requests received through Zillow.com in September revealed that a homeowner who raises his or her credit score to 640 points may benefit from

If you have a credit score at 620 — generally considered the dividing line between good and bad credit — boosting it by 20 points could save you thousands of dollars on your mortgage. And there are simple ways to do this in a short time.

An analysis of about 300,000 loan requests received through Zillow.com in September revealed that a homeowner who raises his or her credit score to 640 points may benefit from a 0.10 percent reduction in their annual percentage rate, or APR.

For a $300,000 home loan with a conventional 20 percent down, this yields a savings of $10,000 in interest costs over the life of a 30-year fixed-rate loan.

What about those with credit scores under 620? Without enough loan requests in that segment, Zillow was unable to generate any findings for those deemed to be in the “bad credit” zone. (According to Fico.com, this is an estimated 29.3 percent of all Americans.)

“People with scores under 620 should not expect the same conventional rates,” says Jason Biro, author and founder of the nonprofit, Saving Your American Dream. “Lenders are now looking at entire credit history, such as a bankruptcy or foreclosure, and credit worthiness, not just your score.”

However, Biro says that those falling within the threshold of 620 to 719 should keep working on their credit scores to benefit from lower interest rates. Here’s what you can do to easily boost your score 20 points within a few months:

1. Pull your credit report. Obtain a free copy of credit report from annualcreditreport.com, which you are entitled to each year by federal law. Request a copy from each of the three repositories (Experian, TransUnion, and Equifax) and review them for accuracy.

2. Dispute discrepancies on your credit report. By e-mail or mail, you can appeal any inaccuracies on your report with the repository. According to Biro, if you don’t get a response from the agency within 45 days, the law requires that this information be removed from your credit file.

3. Pay your bills on time and don’t use more than 30 percent of existing credit. Gail Cunningham, vice president of public relations at the National Foundation for Credit Counseling, says 65 percent of your score depends on paying bills on time and the amount of available credit. She suggests using less than 30 percent of your existing lines of credit to see an immediate jump in your score and being diligent about timely bill paying (all you need to cover is the minimum payment required by the due date).

4. Request a score improvement analysis. Another option is to get a score improvement analysis, says Biro, in which mortgage brokers or credit counselors can use credit software to see what you should do first — whether it’s paying down debt to closing down accounts — to bump up your credit score the fastest.

While these tips are what can make the biggest impact in a short amount of time, they won’t magically discharge your credit woes overnight, experts say.

Once the errors are corrected, you’ve reduced your debt or made other necessary adjustments, the improvements should only take a month or so to be reflected in your credit score. However, start to finish, Cunningham recommends beginning the process about three months before you’d like to apply for a loan or refinance your mortgage.

But the good news, she says, is that the lower your credit score, the faster you will see improvement.

 

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Source: http://realestate.aol.com/blog/2010/12/09/raising-credit-score-reduces-mortgage-costs/

Government National Mortgage Association (Ginnie Mae) closing Fair Credit Reporting Act Real Estate Settlement Procedures Act (RESPA) mortgage jumbo loan principal balance

Filed under: News, Buying, Refinancing

WASHINGTON — The average rate on the 30-year fixed mortgage dropped near its all-time low this week, making homebuying and refinancing a bargain for those who can qualify. Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan fell to 3.88 percent from 3.98 percent. That’s just above the rate of 3.87 percent reached in February, the lowest since long-term mortgages began in the 1950s.

The 15-year mortgage, a popular option for refinancing, plunged to a fresh low of 3.11 percent from 3.21 percent last week. The previous record of 3.13 percent was hit last month.

Mortgage rates are lower because they tend to track the yield on the 10-year Treasury note. Last week’s disappointing report on March job growth led more investors to sell stocks and buy Treasurys, which are considered safer investments. As demand for Treasurys increases, the yield falls.

Yet the low rates are unlikely to draw in many more people looking to buy a home or to refinance their mortgage.

Waiting, As Home Prices Keep Falling

Some would-be buyers are still skeptical about purchasing a home with prices still falling. Home appraisals that are higher or lower than the sales price have scuttled a rising number of home contracts. Many Americans are struggling with damaged credit and unstable finances.

And mortgage rates have been below 4 percent for all but one week since early December, leaving some potential buyers and refinancers unimpressed by new record lows.

“The rates have been very attractive for some time,” said Bill Armstrong, vice president of Mackintosh Realtors in Damascus, Md. “Rates going a little higher or lower is not going to have much of an impact.”

Still, the mild winter has helped lift expectations for the housing market after four years of sluggish sales.

January and February made up the best winter for re-sales in five years, when the housing crisis began. And builders in February requested the most permits to construct homes in more than three years.

Fewer Apply

Applications for new mortgages have fallen over the past month, according to the Mortgage Bankers Association. But there has been a sharp rise in the average mortgage size, suggesting an appetite for bigger loans. The average size of mortgage applications has increased by $20,000 since December, to about $235,000 last month.

Home prices continue to fall. Prices tend to lag sales and millions of foreclosures and short sales — when a lender accepts less than what is owed on a mortgage – remain on the market. And the housing crisis and recession have also persuaded many Americans to rent instead of buy, which has led to a drop in homeownership.

To calculate the average rates, Freddie Mac surveys lenders across the country on just Monday through Wednesday of each week.

The average rates don’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fees for the 30-year and 15-year fixed loans were unchanged at 0.7.

For the five-year adjustable loan, the average rate fell to 2.85 percent from 2.86 percent, and the average fee fell to 0.7 from 0.8.

The average on the one-year adjustable loan rose to 2.80 percent from 2.78 percent, and the average fee was unchanged at 0.6.<

Copyright 2012 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

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See also:
Homebuying: 5 Key Steps to Your 1st Real Estate Purchase
Banks Neglect REO Homes in Minority Areas, Study Says
Home Costs: 4 Crucial Questions Reveal Hidden Expenses

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Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
See celebrity real estate.

 

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Source: http://realestate.aol.com/blog/2012/04/13/30-year-mortgage-again-nears-record-low/

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Filed under: News, Foreclosures

While the Obama administration may be pondering the idea of helping underwater homeowners through principal write-downs, Federal Housing Finance Agency Director Edward DeMarco said there is no current consideration for principal write-downs on underwater home loans.

DeMarco told C-SPAN in an interview that the FHFA has already assisted borrowers through principal forbearance programs and loan modification tools that have helped borrowers reduce their monthly payments. He said the other balance the FHFA has to strike is making sure home aid efforts do not afflict taxpayers with additional losses since public funds hold up the quasi-federal housing agencies. He placed write-downs on principal in this camp and suggested the FHFA is not going in that direction.

“Principal forgiveness does not accomplish our conservator mandate,” DeMarco said on CSPAN while speaking to reporters from Reuters and The Wall Street Journal. He added,”the borrower still has a responsibility and an obligation for the repayment of the loan.”

Read the full story at HousingWire.

Also see:
Viewpoint: Where’s Housing in the ‘Occupy’ Protests?
Mortgage Mod Hell: Trapped Between Lenders, Collectors
The Mortgage Fix That Can Save the Economy

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Find out how to calculate mortgage payments.
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Find foreclosures in your area.
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Source: http://realestate.aol.com/blog/2011/11/01/federal-housing-agency-says-no-to-principal-forgiveness/

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Filed under: News, Advice, Buying, Financing, Foreclosures, How To, Investing, Renting, Selling

What if you could buy a house for $25,000 in a neighborhood that wasn’t a battle-scarred slum and rent it out for $750 a month as soon as the ink was dry on the deal? Where are these deals that let you recapture your investment in just three years and from then on enjoy a steady monthly income from the property?

If you said Phoenix, Las Vegas or south Florida, you’d be wrong says Paul Habibi, a principal of Habibi Properties and real estate professor at UCLA Anderson School of Management.

Here’s a hint to the place Habibi thinks is the hottest investment around.

Yep, Habibi is humming “Kansas City” right along with Wilbert Harrison, Fats Domino and the 50 or so other recording artists who covered that tune. As for a real estate investment, Habibi says Kansas City, Mo., is ripe for the picking.

Habibi’s approach to real estate deals is not for novice investors, but it is for those who can tolerate some risk and buy into a statistician’s mind. He’s developed a matrix that filters the top 30 MSAs (metropolitan statistical areas) through their projected growth rates (increasing population is good), unemployment (the lower, the better), and whether the city has a diversified job platform (Silicon Valley won’t get his money).

He also rejects places where other investors have already scooped up the bargains (forget Florida and Las Vegas). Phoenix, popular with many investors, also fails his litmus test. It was built as a retirement community and lacks a job infrastructure for future growth, he says. And those Texas cities that everyone bandies about — Dallas, Austin, San Antonio — while their prices have remained flat and they seem to have escaped relatively unscathed from the recession, there are so many investors already there that they’re tripping over one another.

Kansas City is just about perfect, said Habibi, whose company recently concluded its first phase of buying 32 single-family homes there in “C-level” neighborhoods for a price point of $25,000 each, spent $5,000 to $10,000 on repairs and now rents them out for about $750 each. He expects to double or triple his holdings in Kansas City with his second investment fund, for which there is a minimum buy-in of $100,000 for accredited investors to participate.

Kansas City’s population grew at a faster-than-national average pace from 2000 to 2010. With an unemployment rate of 8.7 percent, it falls below the national level of unemployment of 9.1 percent. The city has a diversified industry base that includes Sprint Nextel Corporation, Hallmark Cards, the Fort Leavenworth military base, UPS and a Ford assembly plant. Google has selected the city for its ultra high-speed broadband network project. Plus Kansas City has a business-friendly reputation for encouraging retention of companies.

Habibi discourages individual investors without much experience or tolerance for risk to try to fly solo. He credits much of his success from having an infrastructure in place — people to scout and inspect the homes, screen for tenants, manage the properties on-site and swiftly deal with eviction issues.

For those who don’t want to listen to the expert, click on the images below of some homes for sale in the Kansas City area that are worth checking out:

See other homes for sale in the Kansas City area at AOL Real Estate.

Also see:
College Town Real Estate Investments Score High Marks
Upside Down on Your First House? Just Buy a Second One!
Viewpoint: Why No New Houses May Be a Good Thing

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Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
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Source: http://realestate.aol.com/blog/2011/11/02/where-are-the-real-home-bargains-not-where-you-think/

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Filed under: Credit

Consumer lending is still tight, and your credit score will still be a major factor in 2011 if you want to get the best mortgage interest rates. Even if you don’t have a top score, you may still be able to get a government-backed loan, such as an FHA, VA or USDA, at a decent rate.

To get the best rate on the market, you’ll need to have a FICO credit score of at least 760. But if your credit score is between 700 and 759, your interest rate will be just 0.2 percent higher. That means your mortgage payment on a $200,000 loan will be about $20 more per month. You’ll pay about $10,000 more over the life of the loan on a 30-year fixed-rate mortgage at about 5.06 percent. The lowest interest rate for top scorers is 4.86 percent this week.

If your credit score is between 680 and 699, you can still probably find a bank that will consider you for a mortgage, but you may be able to find a better rate by applying for an FHA, VA or USDA loan. Your best best is to work with an independent mortgage broker who is not tied to a particular bank; that way the broker can find you the bank that will offer you the best deal depending on your credit score.
If your credit score is as low as 620, you may still be able to find a lender that will offer you a government-backed loan, but you’ll have to do some searching. Most banks will only offer an FHA, VA or USDA loan to people with credit scores of at least 640, but some smaller banks will consider applications at 620.

Even though FHA’s official rule is that you can qualify for a 3.5 percent down mortgage with a credit score as low as 580, banks are not offering mortgages to people with credit scores that low. If your credit score is below 620 you’ll need to work on increasing your score first, as well as save more cash. If you’re able to put down more than 20 percent, you may be able to find a bank that will offer you a mortgage.

So what should you do to improve your credit before applying for a mortgage?

Step 1: Check your credit report.

Your first step should be to get your credit reports from all three credit bureaus (Equifax, Experian and Transunion). You can order them for free at the government-run website Annual Credit Report.com. This is the only website that offers free credit reports with no strings. (Other sites might offer you a free credit report but require you to sign up for monthly services.)

Step 2: Challenge any errors on your report.

When you get your report, if you see any errors follow the instructions sent with the report for correcting errors. The credit reporting agency has 60 days to respond to you and will send a corrected report. If it’s still not correct, be persistent and send another letter disputing the report. You may find you need to dispute reports several times before they are correct, but it’s worth the effort to improve your score.

Step 3: Reduce credit card debt.

If you’re carrying large balances on your credit cards, pay them down. To get the best credit score you need a credit utilization ratio of 10 percent to 20 percent. You can calculate the ratio by dividing your total outstanding debt by your total available credit. For example if you have $2,000 of total debt on two credits cards that each has a $5,000 credit limit, your credit ratio would be 20 percent (2,000/10,000).

Step 4: Monitor your credit score.

While you’re working through the process of correcting your credit reports and paying down your debt, you can check what’s happening to your score for free at CreditKarma.com.

Step 5: Order your credit scores.

Once your report is accurate, you’ve paid down your debt and you think you’re ready to apply for a mortgage, order your credit scores at myFICO.com. That way you will see what your potential lenders see. if your score is over 640, most banks will approve a VA or FHA loan. If it’s below 640, you’ll need the help of a specialized broker. If your score is over 680 you’ll be able to consider both government-backed loans and private loans. Look at the numbers and see which one makes the most financial sense given your situation.

If your scores are too low, you may want to see if a parent or other family member will sign as nonoccupant co-signer. If you do plan to work with a co-signer, be sure to inform the broker that up front so he can steer you to the lenders that will approve a loan with a co-signer.

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Get property tax help from our experts.

 

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Source: http://realestate.aol.com/blog/2011/01/07/credit-scores-for-home-buyers-in-2011/

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Filed under: News, Refinancing

Talk about pressure! Everyone and his brother is clenching a mortgage refinance application in his fist and rushing to a lender. With record-low interest rates, you’d be nuts to sit this one out, right?

Actually, wrong.

While no one disputes that mortgage rates really can’t get much lower, there are certain homeowners who actually are better off sitting tight with their higher rates. If any of the scenarios below apply to you, refinancing — even into a lower rate — could be a bad financial move. Here’s why.

1. You’ve had your loan a long time.

Mortgages work like this: In the beginning of the loan, what you are paying is mostly interest. But once you’ve had the loan a while, you begin to actually pay down the principal. If you’ve had your loan a really long time, you have reduced the amount you borrowed (your debt) substantially — a good thing by everyone’s scorecard. But if you take out a new loan, you are rewinding the interest clock and starting over and won’t be paying down the principal anymore — just the interest.

Refinancing rarely makes sense for a homeowner who has been paying for 20 years on a 30-year mortgage. Refinancing and signing up for another 30 years may lower his monthly bills, but he’ll be making payments for 30 more years instead of just 10.

If you are just a few years away from retirement and like the idea of not having a mortgage to pay each month, resetting the interest clock may not be in your best interests. If you need some cash out of your house to pay for college or a new car, a home equity line of credit (HELOC) may be a better bet than refinancing and taking cash out.

2. You plan to sell soon.

Refinancing a loan costs money — anywhere from $2,000 to $5,000 in closing costs, appraisals, fees and points. If your new loan saves you $250 a month but it takes you seven years to recoup those expenses and you are planning on selling next year, it isn’t worth the trouble. To find out whether it’s worth it, do the math: Divide your monthly savings into the total cost of the loan and that’s how many months it will take to recoup your closing costs (divide by 12 if you want to know how many years). If you are planning on moving before that, don’t bother.

And don’t be fooled into thinking your loan is “free” because the lender has so graciously rolled the closing costs into the amount being borrowed. All you are doing there is increasing your loan amount and taken yourself that much further away from paying it off. You pay now or you pay later, but you are paying it just the same. And in the meantime, you are paying interest on that extra amount you just borrowed.

3. You don’t have a real and present need for lower payments.

Sure, it sounds great to knock a few hundred dollars off your monthly mortgage, but what will you be using the money for? If you don’t have a need and are comfortable paying your current loan, why not consider increasing what you pay and knocking down your principal debt faster? “Mortgage repayment is a risk-less investment that yields a return equal to the interest rate on the repaid loan,” notes The Mortgage Professor Jack Guttentag on his website.

Here’s another way to think of it: You have a 6 percent loan. By paying down what you owe, you are saving that 6 percent interest you would have paid. How many investments are paying you 6 percent these days? If you don’t need the money — and we aren’t suggesting draining your rainy day fund here — and have some extra cash lying around, why not use it to pay off your mortgage faster?

But Guttentag makes a much more valid point: “The bigger story is that the people who most need to refinance are the ones who can’t.” Lending standards have tightened to the point where those without a job and/or who are struggling to stay in their homes aren’t able to get loans.

Also see:
Refinancing Do’s and Don’ts
Cash-Out Refinancing: Sign of the Times?

 

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Source: http://realestate.aol.com/blog/2011/08/22/low-refi-rates-are-great-but-not-for-everyone/

401(k)/403(b) loan remaining balance condominium hotel commission private mortgage insurance (MI) leasehold estate no-cost loan

Filed under: Advice, Buying, Financing, Home Equity, Investing, Refinancing

Not that long ago, people bought one house and stayed put in it. After 30 years, they owned it free and clear, and this was a good thing, so went the thinking. Some folks celebrated with a mortgage-burning party, where they took a match to their mortgage papers and rejoiced.

Then along came the housing boom years, and the thinking changed. Only fools stayed put in one loan, let alone in one house. The pressure was on to buy bigger houses and/or refinance into even lower-rate loans; who cared if those lower rates lasted 90 days, let alone 30 years? Anyone who couldn’t keep pace would find themselves priced out of the housing market forever, we were told.

Well, forever came and went pretty quick.

Today, as people look to trim expenses and reduce household debt, you may be wondering whether to remain in the 30-year club or pay off your mortgage early if you can. The answer depends on many factors, including your stage of life and how strong a tolerance you have for its uncertainties.

Broadly speaking, experts say you should consider paying off your mortgage if:

• You are nearing retirement.
• You expect to stay in your house for at least several more years.
• You have enough liquidity from other investments to handle emergencies.

Let’s take a closer look at each of those considerations.

Retiring

Having a mortgage is a great tax deduction. But if you don’t have much taxable income — the largest taxable income is likely your paycheck — you may not need that deduction once you retire.

The other side of this coin is that if you won’t have income, it might be nice to not worry about paying for your shelter each month. Remember that you’ll still have property taxes, home upkeep and maintenance and, if you live in a condo, an HOA fee.

Deciding factor: Check with your accountant and determine the impact on your taxes of paying off your loan early.

Staying Put in Your House

This is a factor that depends on your age, health and family situation. Is your house suitable for you to age in place?

Things to consider are whether there are stairs, a bedroom on the ground floor, and room for a live-in caregiver should you need one. Is it near good health care and convenient for shopping? Close to family, friends and the activities you enjoy? If you anticipate limiting your driving, is the house in a location where you can get around by public transportation?

Deciding factor: The decision to move is one that can be made at any point; you don’t need to make it on the day of your retirement party. And as such, you also don’t need to rush to pay off your loan that day either.

Liquidity

You presumably have considerable cash reserves if you’re contemplating paying off your loan. Would investing that money elsewhere serve your interests better?

If you took the money you would use to pay off the mortgage and instead invested it in your 401(k) or IRA, would you get a better rate? “Use the money to build wealth,” said Wayne Bogosian, president of the PFE Group and the co-author of “The Complete Idiot’s Guide to 401(k) Plans.”

By paying off your mortgage, you are taking a highly liquid asset — your cash — and converting it into something far less liquid — home equity. Once your money is tied up in equity, the only way to get at it is through a home equity loan. In other words, the bank will charge you to use your money.

Deciding factor: Do you really have enough cash in your emergency fund and have fully funded your retirement? If not, save the match or find something besides your mortgage to burn with it.

For more insight on mortgages and related topics see these AOL Real Estate guides:

• Mortgage Jargon in Simple Terms
• How to Get a Low Mortgage Rate
  
• When to Refinance
• Four Ways to Benefit From a Cash-In Refinance

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Get property tax help from our experts.

 

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Source: http://realestate.aol.com/blog/2011/06/23/pay-off-your-mortgage-early-it-depends/

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Filed under: News, Economy, Financing

WASHINGTON — The average rate on the 30-year-fixed mortgage fell this week to a record low, the ninth time that has happened in the last year. But even with the cheapest rates in history, the housing market remains depressed.

Mortgage buyer Freddie Mac said Thursday that the rate on the 30-year loan dropped to 3.87 percent this week. That is below the previous record of 3.88 hit two weeks ago.

The average on the 15-year fixed mortgage fell to 3.14 percent, also a record low. Records for mortgage rates date back to the 1950s.

Mortgage rates tend to track the yield on the 10-year Treasury note, which fell below 1.9 percent this week.

Rates have been low for more than a year, and the average rate on the 30-year loan has hovered near 4 percent for more than three months. Yet few people can afford to buy a home or qualify for a loan. Many of those who can have already done so.

High unemployment and scant wage gains have made it harder for many others to qualify for loans. Still others don’t want to sink money into a home that they fear could lose value over the next few years.

Sales of previously occupied homes were dismal last year. New-home sales in 2011 were the worst on records going back half a century.

Builders are hopeful that the low rates could boost sales next year. But so far, they have had a minimal impact.

Mortgage applications have risen slightly over the past four weeks, according to the Mortgage Bankers Association. But they are coming off extremely low levels.

To calculate the average rates, Freddie Mac surveys lenders across the country Monday through Wednesday of each week.

The average rates don’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for the 30-year loan rose to 0.8 from 0.7; the average on the 15-year fixed mortgage was unchanged at 0.8.

For the five-year adjustable loan, the average rate fell to 2.80 percent from 2.85 percent. The average on the one-year adjustable loan rose to 2.76 percent from 2.74 percent.

The average fee on the five-year adjustable loan rose was unchanged at 0.7; the average on the one-year adjustable-rate loan was unchanged at 0.6.

Copyright 2012 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

Also see:
Open Houses of the Week: Super Bowl Weekend
Distressed Sales Undercut Home Prices in 2011, Study Says

 

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Source: http://realestate.aol.com/blog/2012/02/03/30-year-mortgage-rate-falls-to-ninth-record-low-in-last-year/

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The government’s $25 billion settlement with the nation’s five biggest mortgage servicers over so-called “robo-signing” practices could boost short sales, as loan servicers will receive credit when they approve sales that include forgiveness of a portion of underwater homeowners’ debt.

Although the settlement is only expected to help a fraction of homeowners who owe more their properties are worth — perhaps one in 20, according to one estimate — it will also help bring certainty back to housing markets by removing some of the obstacles that have been keeping homes stuck in the foreclosure pipeline.

Announced last month, detailed terms of the agreement between mortgage servicers and a coalition of state attorneys general and federal agencies were filed today.

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Broadly, the settlement calls for mortgage servicers to pay $5 billion in fines and commit to a minimum of $17 billion in homeowner relief, including principal reductions. Another $3 billion is earmarked for helping underwater borrowers refinance.

“We will see an increase in short sales, because lenders and loan servicers will get the same credit for doing a short sale, as if they did a loan modification or principal reduction,” said Rick Sharga, executive vice president of Carrington Mortgage Holdings LLC.

The Wall Street Journal reported Sunday that the structure of mortgage write-downs was a major point of contention in the year-long negotiations leading to the settlement.

Allowing debt forgiveness on approved short sales to count against the required $17 billion in principal reductions helped secure a settlement that will reach more borrowers, the paper said. Loan servicers will also get partial credit even when it’s investors, rather than the banks themselves, taking the loss, the Journal said.

A researcher at the Brookings Institution told the Journal that the settlement could help about 5 percent of underwater borrowers, or about 500,000 homeowners.

“We will probably see a short-term increase in forcelosure activity, because the servicers and lenders at last have a sense of certainty about what they can and cant do,” Sharga told Inman News. Part of that increase will also be among loans that don’t meet the criteria of the agreement.

For loan servicers to get credit for a principal reduction, a loan must be at least 30 days delinquent, have a pre-modification loan-to-value (LTV) ratio of at least 100 percent, satisfy specified debt-to-income ratios (DTIs), according to ananalysis of the settlement by the lawfirm K&L Gates. At least 85 of occupied properties must have had an outstanding principal balance at or below the highest Fannie Mae and Fanni Freddie conforming loan limit cap as of January 1, 2010.

Because servicers won’t get 100 percent credit for all types of relief that are provided, the actual amount of relief provided could total as much as 32 billion, state attorneys general said in announcing the settlement.

“In terms of the overall housing market , our position is this will have very little effect on anything,” Sharga said. “Consumer advocates don’t think it went far enough, and people who look at housing markets realize that the number of properties and the amount of money involved won’t have a measurable effect on markets.”

Federal housing officials addressed those and other concerns today.

“This agreement does not — and is not intended to — solve or resolve all the issues and abuses related to the housing crisis,”  officials with the Department of Housing and Urban Development blogged today. “This agreement is very narrow as to what it releases banks from.  This settlement is intended to address the servicing aspect of the crisis, which did not cause the housing crisis.”

The settlement doesn’t prevent the government from punishing wrongful securitization conduct that will be the focus of the new Residential Mortgage-Backed Securities Working Group, HUD noted. State and federal authorities can also pursue criminal enforcement actions related to conduct by servicers, including civil rights, fair housing, fair lending and other violations.

Also, if the remaining six to 14 loan servicers sign on to the settlement, it would grow to about $30 billion with more than $45 billion in benefit to homeowners, HUD said.

Cade Holleman, executive director of the Irvine, Calif.-based National Association of Women REO Brokerages, said the day is fast approaching when brokers and agents who have concentrated heavily in real-estate owned properties will have to diversify.

Short sales, refinancings, and loan modifications are each “pulling REO inventory out of the game,” he said.

“You’ve got to keep your eye on that process,” Holleman said.”You can no longer be 80 percent REO,” but must diversify into short sales and property management.

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Filed under: Home Equity

Think it’s tough to qualify for refinancing your existing mortgage? So does Richard Shin, a Queens attorney with good credit and great income who was turned down by his original lender when he wanted to refinance his 30-year-fixed rate mortgage on his single family brick home to a 15-year-mortgage with a lower interest rate. Due to tighter lender restrictions, he didn’t qualify until he found a lender who let him bring cash to the table

Think it’s tough to qualify for refinancing your existing mortgage? So does Richard Shin, a Queens attorney with good credit and great income who was turned down by his original lender when he wanted to refinance his 30-year-fixed rate mortgage on his single family brick home to a 15-year-mortgage with a lower interest rate. Due to tighter lender restrictions, he didn’t qualify until he found a lender who let him bring cash to the table to pay down his mortgage.

The number of homeowners taking out a refinance is on the decline and may further dip in 2011, according to the Mortgage Bankers Association, but of those who do refinance lenders are seeing a higher percentage come as cash-in borrowers – those refinancers who bring cash to the table in order to seal the deal.

“We used to have maybe one borrower a year bring cash to the table, but now we’re seeing three or four a month,” said Matthew Hackett, an underwriting manager with New York City lender Equity Now, which refinanced Shin’s home.

Hackett says cash-to-the-table options are being utilized more often because borrowers are needing to lower their loan-to-value ratio if they hope to lower their existing interest rate from somewhere in the upper 5 percent or 6 percent range down to a rate in the 4 percent or lower 5 percent range. This is not just because of tighter lender restrictions, but also because so many homeowners are underwater and owe more on their mortgages than their homes are worth.

Shin, whose home appraised at $1,150,000, brought $60,100 to closing as a down payment to cover the difference between his old $560,000 mortgage and his new $499,900 loan, which featured a reduced interest rate from 6.25 percent to 4.75 percent.

For others looking to refinance, a cash-in refinance may be their only option, and it’s not as bad as an option as you may think. Although not every one has $60,000 to bring to the table, the amount you do bring will not likely be as high, depending on your goals.

Here are two main reasons to do a cash-in refi:

1. Savings accounts aren’t paying anyway. The interest rate on many savings accounts these days hover around 1 percent, whereas your mortgage rate is far higher. Putting a few thousand toward your refinance if it will help you reduce your interest rate a percentage point or more, might be money well spent, especially if you plan on staying in your home awhile. There’s no reason ti put in more than you need to, however, to reduce that rate, says Hackett.

2. Avoid PMI. If you had less than 20 percent equity in your home when you purchased it, there’s a good chance you’re paying private mortgage insurance. When one refinances, this fee typically goes away if the value of your house has increased enough to lower the loan to value ratio. However, in this economy more people are finding that their value has declined. Even those who were not paying PMI might discover upon a refinance that now they need to due to fallen values. Eliminate this fee by bringing cash to the table to cover the difference so that your refi loan is for 80 percent or less than the value of your home.

Although refinances are declining, they still make up nearly two-thirds of all mortgage applications. As of the end of November, however, they decreased 21.6 percent from the previous week to 74.9 percent of total applications, their lowest level since June 2010, reports the Mortgage Bankers Association.

The pool of eligible borrowers who can refinance is small, and those for whom a refinance is beneficial, have already refinanced or mostly likely will in the near future. This downward trend in refinances will cause a decline in total originations next year, but a greater percentage of refinances will likely come from these cash-in borrowers.

Is a cash-in refi right for you?

What’s your break-even point? If you opt to do a cash-in refi, Hackett says, determine your break-even point to decide how much will make it worth it. For example, if you bring $15,000 to the table to get an interest rate that saves you $250 per month on your mortgage payment, it would take you 60 months, or 5 years before you’ve reached $15,000 worth of perceived savings. If you think you might sell your home in less than five years, you’re better off keeping your money in the bank rather than pursuing that lower interest rate. However, if you plan on staying longer, your savings will be even greater because of what you’re saving in interest payments by having the lower interest rate.

 

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Source: http://realestate.aol.com/blog/2010/12/09/as-refinancing-declines-cash-in-refis-rise/

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Filed under: News, Investing

As the Iowa Republican caucus hogs the media spotlight, a less reported but perhaps equally compelling story continues to unfold in the Hawkeye State.

While most of the country continues to struggle with the aftershocks of the housing meltdown, Iowa is riding the wave of a remarkable real estate boom. Republican primary candidates in Iowa needn’t fear broaching the subject of real estate as they might in other states: farmland prices in Iowa have skyrocketed more 30 percent in the last year alone, MSNBC reports.

The rapid climb in prices continues a trend that has emerged over the last few years in states across the grain belt. Prices of farmland in some parts of Iowa rose 23 percent last year, The New York Times has reported. The spike has been driven by a boom in crop prices. Buoyed by rising demand for ethanol, the price of corn, for example, has tripled in only half a decade, reports MSNBC.

Some land in Iowa recently sold for $20,000 an acre, setting a state record.

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Reminiscent of the real estate boom leading up to the 2007 meltdown, the rise in farmland prices has some experts cautioning that Iowa and its neighbors could be incubating the country’s next real estate bubble. The Times reports that the president of the Federal Reserve Bank of Kansas City, Thomas M. Hoenig, told the Senate Agriculture Committee in February that farmers could suffer from a drop in real estate prices if grain prices were to fall and interest rates tick up.

But the risk of implosion may not be as high as some fear, since many land buyers are paying hefty cash down payments for their purchases. MSNBC was told that buyers are often required by banks to pay for close to half of the land that they buy upfront. Strict lending standards like that stand in stark contrast to those that fed the subprime loan crisis.

For the moment, Iowa appears to be poised to enjoy the current rise in real estate prices.

Meanwhile, real estate markets for much of the rest of the country are still sputtering. The Standard & Poor’s/Case Shiller Index released last week reported that real estate prices dropped in 19 of 20 cities from September to October. And as of October, banks looked to be on track to repossess 800,000 homes by the end of 2011.

One recent report from the National Association of Realtors has offered a glimmer of hope on an otherwise bleak horizon, however. According to the report, pending home sales in November reached their highest level in a year and a half, possibly indicating the beginning of a market turnaround.

Also see:
How Large We Live: Average Home Sizes Across the U.S.
2011 in Real Estate: The Top 11 News Stories

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Source: http://realestate.aol.com/blog/2012/01/03/iowa-real-estate-boom-defies-slump-felt-elsewhere/

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Filed under: News, Credit

By Jon Prior

Freddie Mac CEO Charles “Ed” Haldeman gave a strong signal Friday that new incentives from the Treasury Department may be enough to start principal reduction on mortgages backed by the government-sponsored enterprises.

In January, the Treasury said it would triple incentive payments to mortgage investors who allow principal reduction in Home Affordable Modification Program workouts. The payouts ranged between six and 21 cents to the investors for each dollar forgiven under HAMP, but that will grow to between 18 and 63 cents.

“I have to say recently the Treasury sweetened the program and tremendously increased the incentive payments in their offer to us,” Haldeman said at HousingWire’s REThink Symposium. “We will reevaluate that to see what may be in our economic best interest. If there are very large incentive payments — which could be 50 percent of what you could write down — it may be in our economic self-interest to participate in that.”

There are currently 11.1 million borrowers who owe more on their mortgage than the house is worth, according to CoreLogic. Of that, estimates show roughly 3.3 million of those mortgages belong to Fannie and Freddie.

The GSEs and their regulator, the Federal Housing Finance Agency, long shunned principal reduction. Their biggest fear is moral hazard — that borrowers who are still current on their underwater loan would strategically default in order to get principal written down.

“We thought principal reduction could have unintended, secondary consequences on other borrowers seeking the same kind of reduction,” Haldeman said.

One previous analysis showed the GSEs would take significant credit losses if a wide-scale program was put in place. A new analysis from the FHFA, which would cover the new HAMP incentives, is expected to be released in the coming weeks.

NPR and ProPublica reported Friday that the analysis will show a reversal, that principal reduction will work for the GSEs under the new version of HAMP.

“As we complete the review, the public should understand that Fannie Mae and Freddie Mac continue to offer a broad array of assistance to troubled borrowers and have continued to implement HARP 2.0 to enhance refinancing opportunities for underwater borrowers,” FHFA said in a statement.

Treasury Secretary Timothy Geithner told a House panel this week he and FHFA Acting Director Edward DeMarco were working out their differences.

Haldeman, who announced in October that he would leave his post at Freddie, said the principal reduction verdict will ultimately reside with DeMarco, but he isn’t operating on his own.

“At the end of the day, we are in conservatorship, and he is the conservator. But the way it works on a day-to-day basis is that it’s a very close collaboration. It is extremely rare that I had a different point of view than Ed DeMarco,” Haldeman said.

Read more on HousingWire:
Fannie and Freddie could reverse course on principal reductions
Negative equity gap nears $4 trillion
BofaA offers distressed homeowners a chance to stay in homes

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Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
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Source: http://realestate.aol.com/blog/2012/03/26/freddie-mac-principal-reductions-may-be-headed-homeowners-way/

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Filed under: News, Buying, Investing, Selling

It’s no secret that one of the few bright spots in the housing market today comes from all-cash buyers, many of whom are foreign investors. But a new bipartisan bill in the Senate aims to take this trend to its most logical (and controversial) end — buy a house and you’ll qualify for a resident visa in the U.S.

The bill, proposed by Sens. Chuck Schumer (D-N.Y.) and Mike Lee (R-Utah), seeks to lure foreign buyers by offering a resident visa in exchange for a cash purchase of at least $500,000 on a single-family home, condo or townhouse, according to The Wall Street Journal.

The proposal takes its cue from the “EB-5″ program (formally known as the Immigrant Investor Program), in which foreigners who invest in job-creating projects that are worth at least $500,000 in high-unemployment areas are granted green cards.

The bill is not, however, without its detractors. Richard Smith, CEO of Realogy, the parent company of realty heavies like ERA, Century 21 and Coldwell Banker, told The Wall Street Journal that it’s an unnecessary measure — even without the incentive, foreigners are already snapping up American property.

And he may be right. Of the $1.07 trillion spent on existing home sales between March 2010 and March 2011, about $41 billion changed hands thanks to foreign investors, according to the National Association of Realtors. Additionally, all-cash sales accounted for 30 percent of all purchases — much of which is generated by foreign investors facing favorable exchange rates.

On the other hand, Sen. Schumer told the Journal, the proposal is a quick way to shore up demand for the country’s housing overstock without costing the federal government anything. Until first-time homebuyers overcome the hurdles at the banks, and repeat buyers find ways to unload their current homes, increased sales to foreign investors may be the best way to absorb some of the nation’s enormous inventory of homes.

The investor visas would not leapfrog current waiting lists, which should prevent wealthier foreigners from jumping ahead of other immigrants. The bill also requires investors to apply for a separate visa to work in the U.S, says the Journal.

Readers, what do you think? Would such a bill help or hurt the U.S. economy?

Also see:
Viva Las Vegas! Sin City Now Bargain City
When It Comes to Square Footage, the U.S. Is Cheap
Require 20% Down on a House? Hong Kong Tried That
Pity the Homeowner Who Tries to Sell in These 10 Cities

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Source: http://realestate.aol.com/blog/2011/10/20/hey-foreign-investors-buy-a-house-get-a-visa/

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Filed under: News, Financing

Qualifying for a loan in today’s tight credit market is hard. But add race to the mix, and a borrower’s odds can go from bad to worse, a new report suggests.

In a study of loans created on Prosper.com, a peer-to-peer lending website where applicants are encouraged to include a personal photo, researchers found that black borrowers are 25 to 35 percent less likely to receive funding than a white borrower with similar credit.

The report, entitled “What’s in a Picture? Evidence of Discrimination From Prosper.com,” studied 110,000 loan applications from the popular lending website created between June 2006 and May 2007.

“By far the biggest factor was race,” said Devin Pope, co-author and assistant professor at the University of Chicago Booth School of Business. Of the 110,000 loans studied, about 5,000 were home finance or repair related.

Part of the reason for the stark discrepancy, Pope told AOL Real Estate, is that the online lending market is less regulated than its brick and mortar counterpart, where discriminatory practices are more easily identified.

But that doesn’t preclude racial discrimination from real-world borrowing entirely. In fact, a closer probe of mortgage lending practices during the housing run-up revealed that African-American and Latino borrowers were more frequently offered high-interest, sub-prime mortgages than their white counterparts, even when they qualified for better terms.

The investigation led to a historic settlement in which Bank of America agreed to pay $335 million to settle widespread claims of discriminatory lending at its Countrywide unit. The Department of Justice cited over 200,000 cases in which black and Latino borrowers were charged higher fees and interest rates without regard for their credit profile.
In 2006, at the height of risky home-loan servicing, 52 percent of loans to African American families were subprime; for Latino families, more than 40 percent were subprime, according to the Center for Responsible Lending, a consumer watchdog group. By the time the housing market rights itself, some 40 to 50 percent of subprime loans will have failed, said Kathleen Day, a spokesperson for the CRL.

Other Findings

While race was the largest factor in determining loan funding, the study also detected other biases on the peer-to-peer lending site. Older and overweight applicants were 5 to 10 percent less likely to get funding, while people who looked unhappy in their photos were 10 to 15 percent less likely to close on a deal. (Pope admits that the sample size for “unhappy” applicants was considerably smaller.)

Alternatively, female applicants were actually 10 to 15 percent more likely to receive funding for their projects.

UPDATE: While the data for the study was captured between June 2006 and May 2007, Prosper.com has overhauled its lending model since the survey was conducted, according to spokesperson Laurie Azzano. The platform now uses blind bidding, which no longer allows users to post personal photos, she said.

Also see:
Landlady’s ‘White Only’ Sign Still Not OK, Commission Says
Confederate Flag Gets South Carolina Neighbors Up in Arms
WATCH: Ornery Neighbor Scaring Off Prospective Buyers?

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Find out how to calculate mortgage payments.
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Find foreclosures in your area.

 

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Source: http://realestate.aol.com/blog/2012/02/24/black-borrowers-face-higher-hurdles-in-lending-study-shows/

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Filed under: News, Economy, Financing, Refinancing

Kate Hanni is no stranger to public advocacy. After she was trapped in a plane on the tarmac for more than nine hours, she formed Flyers Rights, the largest nonprofit advocacy group for airline passengers’ rights. The result was the passage of the Airline Passengers Bill of Rights and the three-hour tarmac-delay limit for the flying public.

Now Hanni — who blogged about her experience for The Huffington Post – is standing up for another cause that affects her personally: the housing crisis. This time, instead of an airplane, she’s trapped in mortgage modification hell. Her complaint? Lenders won’t talk to you unless you are behind in your payments, and then once you are, their debt collectors start harassing you with calls asking when you expect to pay up.

Hanni, a real estate agent for 23 years, and her husband, who worked in the wine industry, were doing just fine until the recession dried up both their businesses. Their incomes shrank, along with the value of their Napa Valley, Calif., home. They turned to their savings to stay afloat, running through about 75 percent of their retirement fund and the money they had set aside for their son’s college education. And then — despite all she had read about the frustrations and failures of the loan modification process — Hanni decided to try for one.

The first thing her lender, Bank of America, told her was that loan modifications were only for those who were behind in their mortgage payments, and since buying the house in 1997, Hanni had always paid on time. So in order to qualify, it became necessary to stop paying her mortgage and start ruining her credit.

The collection calls started coming about three weeks after she was late with her first payment. “These calls just won’t stop,” Hanni says, despite her attempts to explain that she’s only doing what the bank advised her to do. “Bank of America is spending a zillion dollars having people make these calls, and it just makes no sense. Why not have a loan modifier call instead?”

While Hanni’s story certainly can’t top that of Deborah Crabtree — the woman in Hawaii who claims in a lawsuit that Bank of America’s debt collectors called her up to 48 times a day, including at her husband’s wake — it does represent what a lot of homeowners are experiencing.

Trashing Your Credit to Save Your House

With President Obama about to announce mortgage reforms, we are a nation with crossed fingers, hoping that one of the practices he ends is the one in which lenders refuse to give you the time of day unless you first miss a couple of payments.

Hanni, 51, and her husband, 59, “don’t have a whole lot of time to recoup” their spent savings, she says, adding, “every issue facing America is facing my family . . . unemployment, low resources, and being forced to destroy our excellent credit” to apply for a loan modification.

“Forcing Americans out of their homes, removing their real estate residential interest tax credits, and crippling their ability to own again or even to get a decent rental due to a forced, reduced creditworthiness is insane,” Hanni says. “The outcome is that the home will still be devalued, drag down values in the neighborhood and create a worse situation for the former homeowner. Depending on their age, they may never recover from this disaster.”

Judging from what happened the last time Hanni got passionate about a consumer issue, the banking industry had better watch out.

Also see:
HAMP Mortgage Modification Program Still No Help
The Mortgage Fix That Can Save the Economy

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
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Source: http://realestate.aol.com/blog/2011/09/08/mortgage-mod-hell-trapped-between-lenders-collectors/

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Filed under: News, Advice, Financing, Refinancing

Consider this the “snap out of it” slap that Cher gave Nic Cage in “Moonstruck.” If you’re in the market for a house, you need to buy it while the interest rates are low — and by the way, those rates crept up a bit already this week.

Purchase price? Feh. When it comes to how much house you can afford, the number that really matters — unless you live in the rarified world of cash buyers — is what interest rate you can get. And the bad news, for those of you who thought you could wait it out until some expert told you the housing market elevator had reached the bottom floor, is that the real elevator is heading back up — and that’s the elevator of interest rates, not home prices.

According to Dan Green at The Mortgage Reports, for each 1 percent increase in mortgage rate, your home purchasing power drops 10.75 percent. That means if you could afford a $600,000 house when interest rates are 4.5 percent, you can only swing a $535,000 house when the rates go up a percentage point, assuming the same monthly mortgage payment. For each 0.125 percent increase to mortgage rates, your maximum allowable purchase price falls 1.35 percent.

With the exception of a three-month period, average monthly 30-year fixed mortgage interest rates have been at or below 5 percent since 2009. That’s completely unprecedented: Average rates had never even hit a low of 5 percent prior to 2009.

The message: You’ll get a whole lot more house for your money if you move quickly.

For more on mortgages and related topics see these AOL Real Estate guides:

• How to Get a Low Mortgage Rate
• Mortgage Jargon in Simple Terms
• How Much Home Can I Afford?
• How to Buy Foreclosures

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Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.

 

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Source: http://realestate.aol.com/blog/2011/07/06/homebuyers-take-note-mortgage-elevator-is-going-up/

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Filed under: Design, Home Improvement

The prospect of weekly vacuuming and annual steam cleaning is enough to turn off many people to carpet. Dishwashers have gotten so powerful that “pre-rinsing” is becoming as outmoded as vinyl records. Even toilets are self-cleaning. What does this have to do with landscaping? Well, it’s a paradox: American homeowners are willing to hunt down every time-saving device for their home interiors, but they continue to spend dozens, if not hundreds, of hours maintaining their lawn each year. Moreover, the maintenance of your lawn is, if anything, worse for the local ecosystem than many of the low-maintenance alternatives.

Learn alternative landscaping techniques for your lawn and the myths about tending it by which you should no longer abide!



The Sanctity of the American Lawn

Arguably, natural grass landscaping is a generational thing. The vision of our dream home was conceived of early on in life: Our parents had natural grass lawns, so our dream house typically includes a natural grass lawn. But the 21st century has seen a growing concern for water conservation, while “grassless” landscaping design has improved by leaps and bounds. Green doesn’t always mean natural, and many lawn grasses aren’t even indigenous. It doesn’t have to be a moral thing: Almost nobody will judge you for maintaining a perfectly manicured St. Augustine grass lawn. But at the same time you shouldn’t base your choice of ground cover on the idea that natural grass is an inherently superior way to go. (Find highly rated professional landscapers in your area.)


Alternative Landscaping Ideas, Tips, and Benefits

• Ground covers. Mother Nature has a much larger catalog of botanical beauties than just grass. Juniper, clover, periwinkle and mosses are just a few alternative ground covers. For something more inside-the-box, “low-mow” grass species or ornamental grasses can at least reduce your lawn maintenance load.


• Conserving water. If you’re less concerned with reducing maintenance and more concerned with eco-friendly landscaping, you should focus on water conservation. Reportedly, landscaping accounts for more than 50 percent of water consumption in some municipalities.


• Reducing lawn area. Don’t fall into the trap of all-or-nothing thinking. By adding decorative rocks, installing a concrete patio or walkway, and planting a well-placed tree or two, you can significantly reduce your lawn area (and maintenance) without completely losing the appeal of natural grasses. (Find highly rated professional walkway-installers in this area.)

Leaf-Raking: The Great Landscaping Myth

Hand-in-hand with the sanctity of conventional landscaping are a handful of myths that lead to further missed opportunities to lower your maintenance chores. Perhaps no myth is bigger than the one that you must rake and dispose of leaves before they’re buried under the first heavy snowfall. It’s true that you can’t leave a layer of fall foliage to slowly decompose on your lawn, while blocking sunlight and moisture. But if you get the lawn mower out and churn those leaves up into fertilizing mulch, your lawn may actually be better for it. You don’t even have to wait for a dry spell. Assuming your mower blades can avoid getting snagged, slightly damp leaves actually shred more readily.

Now, there is one caveat: A thick layer of mowed leaves can contribute to excessive thatch, the layer of organic material between grass blades and the soil. Ironically, the dead leaves that improve the soil quality can cause grass to grow too fast the following spring, the ostensible cause of thatch. That said, so long as you don’t treat your lawn with conventional fertilizer and don’t overwater, your lawn should be fine. To truly ease your mind, you can periodically (maybe once every one to three years) aerate your lawn, a wise step whether you rake your leaves or not. (Find highly rated professional landscapers in your area.)


Other Landscaping Myths

• It’s better to have long grass or it’s better to have short grass. Different grasses have different optimal lengths, but more important, by far, is the willingness to mow your lawn often. Taking long grass and mowing it short will leave mostly bare stock, leaving your grass less able to produce new grass shoots. If you’re unwilling to make this commitment, it’s another reason to consider the alternatives. (Find highly rated lawn care professionals in your area.)


• Hedges are the best way to improve my home’s curb appeal. Hedges or shrubs are beautiful landscaping additions, but they can also be dangerous disguises. Hedges can trap moisture to the side of your home for extended periods. If you’re trying to cover up siding that’s already in decline, hedges can become the coup de grace. (Find highly rated professionals to remove trees or shrubs.)


• It’s best to water my lawn in the evening, when I won’t need as much water. Yes, the midday sun will cause a certain amount of your lawn irrigation to evaporate, but your grass is still in greatest need during this time. By watering later in the day, you may be creating enough moisture for fungus to take hold. (Find highly rated sprinkler-system professionals in your area.)

Still wondering what you should do with your lawn or exterior spaces? See AOL Real Estate’s Home Improvement Guides for more tips:

• Landscaping With Low-Maintenance Lawns Saves Money
• Best Landscape Design Options

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Get property tax help from our experts.

 

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Source: http://realestate.aol.com/blog/2010/09/03/make-your-lawn-eco-friendly-and-low-maintenance/

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Filed under: News, Economy, Financing, Refinancing

WASHINGTON — The average rate on the 30-year fixed mortgage fell to 4 percent this week, nearly matching the all-time low hit just one month ago.

Freddie Mac said Thursday that the rate on the 30-year loan dropped from 4.10 percent last week. Four weeks ago, it dropped to 3.94 percent — the lowest rate ever, according to the National Bureau of Economic Research.

The average rate on the 15-year fixed mortgage fell to 3.31 percent from 3.38 percent. Four weeks ago, it too hit a record low of 3.26 percent.

Mortgage rates tend to track the yield on the 10-year Treasury note. They yield fell this week after investors shifted money out of stocks and into the safety of Treasurys on fears that Europe’s debt crisis could worsen.

The Federal Reserve is also shifting more money into longer-term Treasurys to try to force mortgage rates lower. Treasury yields fall when buying activity increases.

Less Home Buying Than Expected

Federal Reserve Chairman Ben Bernanke said Wednesday that low rates have failed to spur the increase in home buying or mortgage refinancing that government officials had expected.

High unemployment and declining wages have made it harder for many people to qualify for loans. Many Americans don’t want to sink money into a home that could lose value over the next three to four years. And most homeowners who can afford to refinance already have.

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The number of Americans who bought previously occupied homes fell in September and is on pace to match last year’s dismal figures — the worst in 13 years.

Sales of new homes rose last month after four straight monthly declines. But the increase was largely because builders cut their prices. And it followed a peak buying season that was the worst on records going back nearly 50 years.

A Run on Refinancing

The low rates have caused a modest boom in refinancing, but that benefit might be wearing off. Most people who can afford to refinance have already locked in rates below 5 percent.

Rates have been below 5 percent for all but two weeks in the past year. Just five years ago they were closer to 6.5 percent. Ten years ago, they were above 8 percent.

The average rate on the five-year adjustable loan fell to 2.96 percent from 3.08 percent. That matches a record low hit four weeks ago.

The average rate on the one-year adjustable loan declined to 2.88 percent from 2.90 percent. It fell last month to 2.81 percent, the lowest on records dating to 1984.

The average rates don’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for the 30-year fixed mortgage fell from 0.8 to 0.7. The average fee on the 15-year fixed loan was unchanged at 0.7. The average fees on the five-year adjustable loan one-year adjustable loan were also unchanged at 0.6.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country on Monday through Wednesday of each week.

Copyright 2011 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

Also see:
Open Houses of the Week: Hobnob With the 1 Percent
Where Are the Real Home Bargains? Not Where You Think!
Mortgage Giant Asks Taxpayers for Another $6 Billion

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Find rentals in your area.

 

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Filed under: News, Refinancing, Credit

Washington is acting to rescue tens of thousands of beleaguered homeowners by offering interest-free loans, some of which will ultimately be “forgiven” if borrowers follow the rules.

But the pre-screening deadline for applicants is July 22, so interested homeowners must move fast. Click here to get started.

Coming out of the budget of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the $1 billion allotted for the Emergency Homeowners’ Loan Program is expected to help about 30,000 of them, reports The Washington Post.

But qualifying for the relief program is not easy. Among other conditions, applicants must be unemployed or underemployed, 90 days behind on mortgage payments and have received a foreclosure notice.
Homeowners who qualify for the program — which is offered only in 32 states — receive a loan enabling them to meet up to two years or $50,000 worth of mortgage payments. The loan requires no payments for five years, as long as borrowers contribute 31 percent of their income or at least $150 to their mortgage payments. After that, the magic starts: The government reduces the loan balance by 20 percent each year until, poof — no more loan.

MSN Money offers a more thorough breakdown of the program.

For more on mortgages and related topics see these AOL Real Estate guides:

• Stop Foreclosure Scammers Before They Scam You
• How to Get a Low Mortgage Rate
• Mortgage Jargon in Simple Terms
• Foreclosure Help: What a Housing Counselor Can Do

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.

 

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Source: http://realestate.aol.com/blog/2011/07/05/cutoff-date-for-relief-loan-applications-fast-approaching/

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They may not be hopeful that the U.S. economy will rebound any time soon, but most Americans are optimistic about the future of their own personal finances. A newly released national survey conducted by KRC Research for the Certified Financial Planner (CFP) Board of Standards, Inc. finds that 83 percent of the 1,011 adults polled [...]

Source: http://feedproxy.google.com/~r/TruthfulLendingDotCom/~3/_IoLIckZHow/

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Filed under: News, Foreclosures

By Les Christie

NEW YORK — Tamera Hewlett-Vallejo and her husband, Tom, came within a whisker of losing their Sacramento, Calif., home in a foreclosure auction last month. But as a result of the $26 billion national mortgage settlement, the Vallejos were given a last-minute reprieve.

Their mortgage lender, Bank of America, called off the auction, then offered to slash the couple’s mortgage by more than $85,000 and cut their interest rate to 4.6 percent from 6.7 percent. As a result, the couple’s mortgage payment would be $570 cheaper at about $2,100 a month.

The Vallejos are among the earliest recipients of one of the foreclosure settlement’s biggest windfalls. As part of the deal, which was struck between the nation’s five biggest mortgage lenders and the states’ attorneys general, roughly 1 million borrowers will have their mortgage principal slashed by as much as $100,000.

Early last month, Bank of America said it had identified more than 200,000 borrowers who pre-qualified for principal reductions. The bank has yet to reach out to these homeowners, however, saying it will begin to send out letters to this group within a week or two, according to spokesman Rick Simon. It aims to reach most eligible borrowers within six months.

But there is a small group of homeowners, including the Vallejos, who are either already in the mortgage modification pipeline or in danger of losing their home, who have already been contacted by the bank.

A Last Minute Reprieve

The Vallejo’s home was scheduled to be sold in a foreclosure auction at 9:30 a.m. on a Monday in early March. “We literally went to church on Sunday praying for help,” said Hewlett-Vallejo.

The day of the auction, however, the Vallejos discovered that their address wasn’t on the list of properties on the block. Later that day, a representative from Bank of America called to tell them that they had qualified for a principal reduction under the settlement.

“I sat with tears running down my face,” said Hewlett-Vallejo.

Tamera, a real estate agent, and Tom, who is a teacher, had bought the three-bedroom wood-frame cottage in 2001 for less than $240,000. In the midst of the housing boom, when their home’s value had soared to more than $430,000, the couple refinanced in order to get a lower rate and take out extra cash for some home improvements.

Then, in 2009, a commercial real estate deal that Tamera invested in went sour and ended up in litigation. The couple soon fell behind on their mortgage.

By September 2010, the missed payments — and ensuing fees — brought their mortgage balance up to about $385,000. Meanwhile, their home’s value had plunged by more than 30 percent to about $300,000.

For two years, the Vallejos tried to get Bank of America to modify their mortgage. But the bank kept denying the request, saying it needed additional paperwork.

“Each time, we started over with a new person and some new requirements based on that person’s or the underwriter’s perspective,” she said.

By the day of the foreclosure auction, the Vallejos assumed that they were out of luck.
“We didn’t know what we were going to do,” said Hewlett-Vallejo. They hadn’t even made new living arrangements.

A few days after finding out the auction was off, the Vallejos received the details of their modification from Bank of America. The bank offered to bring their balance to $300,000. They’d still be slightly underwater, but the principal reduction alone would save them about $400 a month.

Bank of America said its goal is to lower housing payments to no more than 31 percent of income. “If the payment is still above the affordable payment target, the second step is to lower the interest rate,” said Simon.

In this case, the bank also offered to reduce their interest rate, which would reduce their monthly payments by another $170 or so, and to keep the term of their loan to the existing 23 years that the Vallejos had left to pay.

But there is a catch. “We’re required to make three months of trial payments — April, May and June,” say Hewlett-Vallejo.

If they miss a payment, the deal is off and the Vallejo’s home heads back to the auction block.

More From CNNMoney
Home Prices Hit New Post-Bubble Lows
Mortgage Payments at Lowest Level in Decades
It’s Safe to Sell Your Home Again

Related Articles
What the Foreclosure Settlement Means for You
Bank of America to Move Beyond Mortgage Mess (VIDEO)
Flood of Foreclosures Coming

 

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Filed under: News, Credit

With unemployment high, markets on a hair trigger and the memory of Washington debt-ceiling gridlock still fresh, many Americans are reluctant to put their money toward any venture that could be less than fully secure.

Despite efforts on the part of the White House and the Federal Reserve to encourage borrowing and spending, many consumers and investors are less than eager to take the kinds of risks that could stimulate economic growth — even as the economy risks entering a new recession. With businesses hesitant to hire workers, and with consumers hesitant to make big purchases, fears about the state of the economy could make the economy worse.

Last week, the Fed announced it would be keeping interest rates near zero through the middle of 2013, a policy meant to spur borrowing and keep the economy from slowing to a standstill. But many consumers remain skittish about taking on new debt, especially if they already have loans to pay off, the New York Times reports.

In the housing market, the low rates appear to have resulted in few new mortgage refinancings so far, according to NPR. The housing sector has been plagued by falling home prices for the last five years, and its recovery is seen as a precondition to the broader economic recovery.

Read the full story at The Huffington Post.

For more insight on mortgages and refinancing see these AOL Real Estate guides:

• Mortgage Jargon in Simple Terms
  
• Refinancing Do’s and Don’ts
  
• Time to Refinance? 4 Questions to Ask
• Four Ways to Benefit From a Cash-In Refinance

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Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.

 

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Source: http://realestate.aol.com/blog/2011/08/16/low-interest-rates-no-help-to-housing-market/

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Filed under: Design, News, Economy

While picking up some prescriptions recently, my local pharmacist, who knows I write about home construction, asked me if I had any suggestions for how he should build his new house. Since I’m a big advocate for prefab, I suggested that he consider building his house modular. His response shocked me: “I wouldn’t want to build modular — it would upset my neighbors and bring down the neighborhood.” I thought that type of thinking about prefab was ancient history, but his response was clear evidence that it is not.

After having written several books on the subject — filled with evidence of the beauty and diversity of prefab — I thought we had moved past the bias that prefab is synonymous with double-wides.

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Prefab Options

Prefabricated construction includes all types of buildings that are either partially or completely built in a factory. Modular construction is one of the most common types of prefab. Large boxes are built in a factory and then taken by flatbed truck to a site and lifted with a crane into place. A house can be built with one box or 36 boxes.

Another common type of prefab is panelized construction. Large exterior wall sections of the house are built in the factory and put together on site like a jigsaw puzzle. A similar method is building with structural insulated panels, known as SIPs, which are like sandwiches of oriented strand board, or OSB, fused together with insulation in between. Other types of prefab include concrete panels, prefabricated timber frames and even some log cabins. The savings varies with prefab, depending on the size of the house, location and type of construction.

With all that I’ve learned over the years, I would never consider building a house on-site. The feedback that I get from my readers, when they have acquired some knowledge of prefab, is that they’ve become believers — and wouldn’t consider the on-site option either.

Environmental Impact

My preference for prefab comes from years of investigating the best ways to build a house.

As an environmentalist, there are many reasons to prefer prefab. Much of the on-site construction debris goes into a dumpster — the homeowner is paying for the debris, dumper and tipping charges.

In a factory, wood cutoffs are sorted and used for other houses. Many of the cutoffs from materials, such as drywall and metal, are returned to the manufacturer for recycling. Materials are shipped in bulk to the factories, so they cost less and shipping charges are reduced.

Prefab houses are built in an environment where the wood is protected from the elements and has less chance of developing mold and rot. And it and won’t twist and buckle, creating thermal bridges where air will infiltrate. Furthermore, prefab houses are built by professionals under the watchful eyes of supervisors who are checking the work all along the process.

These advantages are all in addition to the shorter construction time and financial savings associated with building prefab.

Cost Advantages

Several years ago the Structural Building Components Industry compared the construction of a site-built house to a panelized one in a study called “Framing the American Dream.” The panelized house took substantially fewer hours to build, used less lumber, created far less scrap and cost 16 percent less in labor and materials. Another study from a coalition of Philadelphia building experts, titled “Going Mod,” found a $32 savings per square foot using modular rather than site-built construction.

Over the years that I have been writing books on prefab, I have became more and more conscious of the importance of building houses with healthier environments and increased energy efficiency. Heating and cooling houses currently accounts for about 40 percent of the energy used in this country. With the environmental and political ramifications of acquiring energy from fossil fuel, I thought there must be a way to build houses that require less.

I have also been influenced by the recent power outages in the Northeast. Twice in the last six months, it took Connecticut Light and Power almost a week to restore power to my neighborhood. I began to consider how wonderful it would have been to be somewhat independent of the grid (the power utility) and be able to sustain at least some of the energy in our house during those outages. Through my research I’ve found numerous ways of limiting the need for energy in the home and several ways to create energy without the need for fossil fuel.

These options would make the house more comfortable and save on energy costs. According to a report last week by McGraw-Hill Construction, the green housing market is growing rapidly, having tripled since 2008. Green homes, which comprised 17 percent of new residential construction last year, are expected to increase by 29 percent to 38 percent of the market by 2016.

Prefab to Prefabulous

About a year ago I decided to write a book profiling prefabricated houses that require minimal energy. I thought it would probably be difficult to find enough of these houses in this country. To my delight, I found more than I could possibly include in one book.

The houses I found are varied in style, location and method of construction — but they are all smaller, very energy and water efficient, with healthy environments, and with a more sustainable use of materials. The result of this search is “Prefabulous + Almost Off the Grid: Your Path to Building an Energy-Independent Home.” (It’s scheduled for released by Abrams in October and is available for pre-order this week.)

I hope you will send in your questions and follow this blog to learn more about the advantages of prefab and environmentally friendly and energy efficient home construction.

Sheri Koones is an award-winning author of five books on home construction, with the last several focusing on prefabricated construction. Her most recent book is “Prefabulous + Sustainable.” Her latest work, “Prefabulous + Almost Off the Grid,” will be released in October 2012 by Abrams.

See also:
WATCH: The Pros and Cons of Buying a New-Construction Home
Don’t Be Surprised by Costs of Homeownership
Homebuyer’s Remorse: How to Avoid and Cure

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Get property tax help from our experts.

 

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Source: http://realestate.aol.com/blog/2012/03/21/why-your-next-home-should-be-prefab/

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Filed under: News, Financing, Refinancing

Mortgage rates are at record lows and should stay that way as long as economic reports continue to be disappointing, according to Bankrate.com, which tracks mortgage rates weekly. However, if you’ve been thinking about refinancing, you should act quickly. If mortgage rates rebound, they could do so fast, according to Bankrate.com.

But don’t make mistakes in your rush to refinance. Here are five of the biggest ones, according to a survey of LendingTree network lenders. LendingTree is an online marketplace of mortgage lenders.1. Overestimating the value of the home. Despite the fact that home values continue to drop, homeowners still tend to over-value their home. As a result, they receive higher-than-expected loan offers. Use our tool to track home prices in your area so you’ll have a better idea how much your house is worth.

2. Hesitating to lock in low rates. Lenders are seeing borrowers waiting for rates to drop further, missing out on the opportunity to lock-in with the current low rates.

3. Focusing only on interest rates. Borrowers often forget to factor in lender fees, loan terms and lender reputations into their decision to refinance. Compare several offers and run all the numbers (including fees) using calculators at Mortgage Professor to see which offer is the best and to determine whether refinancing even makes sense for you.

4. Overlooking shorter-term loans. Remember, the 30-year mortgage isn’t your only option. A 20-year or 15-year mortgage can shorten the life of the loan and significantly reduce the amount of interest paid.

5. Not knowing what documents are required to refinance. If you haven’t taken out a mortgage or refinanced recently, you might not be aware that you need a lot more documentation these days to get a loan. Be ready to provide pay stubs from a recent month, two months of bank and other financial statements, two years of W-2s and, if you’re self-employed, two years of tax returns showing self-sustaining income.

More from Kiplinger:
10 Cities With the Lowest Cost of Living
Should I Refinance?
10 Best Value Cities for 2011

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.

 

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Source: http://realestate.aol.com/blog/2011/09/20/5-mistakes-to-avoid-when-refinancing/

clear title no-cost loan refinance transaction two- to four-family property adjustment date security sweat equity

Filed under: News, Advice, Economy, Financing, Refinancing, Selling, Credit

“Why won’t the bank just reduce the amount of my loan instead of taking my home and then selling it to someone else for way less than I would have been happy to pay?” It’s a question that gets asked repeatedly these days, especially by people who are facing foreclosure or are upside down on their mortgages.

For the answer, we turned to Jack Guttentag, the Mortgage Professor and Inman columnist.

Guttentag believes that lenders have been too stingy when it comes to reducing loan balances. Private lenders have offered loan reductions only sparingly, he says, and Fannie Mae and Freddie Mac not at all.

Here’s the professor’s take on why homeowners can’t catch a break on loan reductions.

1. The buck stops there.

The decisions to reduce principal loan amounts are made by the firms that service mortgages — the same folks who brought the country the robo-signing scandal. As servicing firms, anything they decide must be in the financial interest of their client — that’s your lender, not you. If they depart from customary practice — and writing down loan balances is a departure from customary practice — the buck stops with them, Guttentag says. In other words, who’s going to take the risk of reducing Joe Homeowner’s loan amount and then have to explain it to the boss? To take Nancy Reagan out of context: They just say no.

2. Banks are in the business of making money.

No lender is going to write down the balance of a loan in default just because you owe more than the home is worth. Truth is, there is no benefit to the lender to helping Joe Homeowner keep his house instead of selling it to the next guy. Plus, to help Joe would eliminate the possibility that the bank could also get a deficiency judgment against him. Banks are in this for the squeeze and think of Joe as just the orange. Nothing personal, of course.

3. In this economy, you will likely default anyway.

Sure, you want to believe that the economy is going to turn around and the value of your home will again rise to what you paid for it. After all, hasn’t listening to a fairy tale been a surefire way to fall asleep?

From the lender’s standpoint, the only reason to write down a loan balance is that it will reduce the chance that you will default. And evidence has shown that people who are heavily underwater — that’s deep in negative equity territory — are more likely to default than those who aren’t. Truth is, negative equity discourages people from making their mortgage payments. They figure: Why keep throwing good money after bad?

4. Banks are short-staffed and the staff they do have is untrained.

Most interactions between mortgage borrowers and servicers are handled by computers or relatively unskilled employees, says Guttentag. Borrowers in serious trouble are referred to a smaller number of more skilled and specialized employees, but until you enter the red zone, you are likely to encounter frustration.

Guttentag says that at the onset of the mortgage crisis, servicers were caught short-handed and the sheer volume of foreclosures in the pipeline hasn’t allowed them to catch their breath.

5. Mortgage insurance works against you.

When mortgages carrying mortgage insurance go to foreclosure, banks are protected up to the maximum coverage of the policy, which generally is enough to cover all or most of the loss. This discourages modifications, says Guttentag. Why would a bank do a modification for $15,000 if the $40,000 foreclosure cost is going to be paid by the mortgage insurer? Even if the insurance coverage falls short of the foreclosure cost, the shortfall has to exceed the modification cost before modification becomes financially more attractive.

So there you have it. A five-point plan for keeping homeowners on the hook for that hefty loan balance.

Also see:
Viewpoint: Where’s Housing in the ‘Occupy’ Protests?
Mortgage Mod Hell: Trapped Between Lenders, Collectors
The Mortgage Fix That Can Save the Economy

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Find out how to calculate mortgage payments.
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Source: http://realestate.aol.com/blog/2011/10/18/mortgage-prof-why-banks-foreclose-instead-of-settling-for-les/

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Filed under: News, Financing, Refinancing

The refinancing market is hot right now. Last week, applications were up by more than 10 percent.

But even if you can get approved by a lender–which is no easy task these days–that doesn’t mean you should take whatever deal the bank offers you.

“Today Show” real estate expert Barbara Corcoran has some strong advice, particularly when it comes to avoiding extra charges at closing time.

In the video below, she explains the importance of the good faith estimate, whether it’s worth using a mortgage broker and how to research potential lenders.

But the best thing you can do to protect yourself against unpleasant surprises, she says, is “bring a pushy friend with you who’s going to ask the important questions that you yourself might not ask.”

To which we say, Hey Barbara, want to come with us to meet our lender next Tuesday?

Also see:
Barbara Corcoran: Queen of NYC Real Estate Tells All

More great videos from AOL Real Estate:
Understanding Home Mortgages
Negotiating Strategies for Home Buyers

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Get property tax help from our experts.

 

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Source: http://realestate.aol.com/blog/2011/11/14/barbara-corcoran-on-refinancing-dos-and-donts/

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Filed under: News, Advice, Celebrity Homes, Other

Why would former Penn State football coach Joe Paterno transfer ownership of his house, worth $594,484, to his wife for $1 in July, unless he knew that he was about to be drawn into the college’s sex-abuse scandal, with potential civil lawsuits and damages heading upfield toward him?

While his lawyer told The New York Times that the ownership transfer was nothing more than a step in a long-term financial estate plan, the move raised some eyebrows. Was the sale an attempt by Paterno to shield assets, fearing that some jury down the road might take him to the cleaners? And by transferring his home to his wife, Sue Paterno, did the coach who once walked on water just sink deeper into the dark hole of public scorn?

AOL Real Estate spoke to several estate lawyers and heard pretty much the same thing: Joe Pa probably didn’t do anything fishy, at least when it came to giving his wife the house for $1 plus “love and affection.” The couple (pictured at left) had previously held joint ownership of the property, for which they paid $58,000 in 1969.

David Shulman, an attorney in Fort Lauderdale, Fla., whose practice focuses on trusts and estates, says there’s no obvious reason to link the home transfer with an attempt to protect assets or do an end-run around prospective creditors. In Pennsylvania, Shulman noted, as long as the property is held jointly — as Paterno’s was — it can’t be subject to the creditors of just one of the spouses. And since Sue Paterno hasn’t been linked at all to the sex-abuse scandal, she has no liability or exposure.

“I haven’t seen the documents,” Shulman said, “but from what’s been made public, it just doesn’t make any sense that this was an attempt to protect assets.”

Then what was Paterno up to? Shulman said the 84-year-old Paterno’s decision to transfer the house more likely had something to do with age-related issues, such as Medicaid and tax planning. To qualify for Medicaid-covered nursing home care, for example, a recipient must “spend down” to a certain level. And people are constantly looking to protect their assets from taxes to ensure that their heirs inherit as much as possible.

Since Paterno has good insurance and a degree of wealth, he probably didn’t do it for Medicaid purposes. Far more likely it was done as an estate planning move to avoid probate, said Shulman. “It is a fairly typical thing for people of means to want to protect their assets for their children or whoever will inherit them,” he said.

Paterno, who was fired as the football coach at Penn State, has been harshly criticized by many for not taking more aggressive steps after a suspected sexual assault of a child by one of his former top assistants was reported to him. And if the reaction to the house transfer is any indication, it’s a safe bet that the burgeoning scandal will cast suspicion on everything else the coach does.

[Correction: An earlier version of this post incorrectly referred to Paterno as Joe Pop; his nickname is Joe Pa.]

Also see:
Taking a Tax Loss When Property Value Declines
Happy End of the Road for RVers: Assisted Living on Wheels

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Source: http://realestate.aol.com/blog/2011/11/16/joe-paternos-real-estate-transfer-suspicious-or-not/

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Q: I have heard that we should get pre-approved for a mortgage loan before looking at homes in Washington or Oregon. Why is a pre-approval the important first step in the home buying process? A: I am glad that you asked that question because getting pre-approved for a home loan is the best way to [...]

Source: http://www.hassonblog.com/2011/11/why-is-pre-approval-important/

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Filed under: Credit

Consumer lending is still tight, and your credit score will still be a major factor in 2011 if you want to get the best mortgage interest rates. Even if you don’t have a top score, you may still be able to get a government-backed loan, such as an FHA, VA or USDA, at a decent rate.

To get the best rate on the market, you’ll need to have a FICO credit score of at least 760. But if your credit score is between 700 and 759, your interest rate will be just 0.2 percent higher. That means your mortgage payment on a $200,000 loan will be about $20 more per month. You’ll pay about $10,000 more over the life of the loan on a 30-year fixed-rate mortgage at about 5.06 percent. The lowest interest rate for top scorers is 4.86 percent this week.

If your credit score is between 680 and 699, you can still probably find a bank that will consider you for a mortgage, but you may be able to find a better rate by applying for an FHA, VA or USDA loan. Your best best is to work with an independent mortgage broker who is not tied to a particular bank; that way the broker can find you the bank that will offer you the best deal depending on your credit score.
If your credit score is as low as 620, you may still be able to find a lender that will offer you a government-backed loan, but you’ll have to do some searching. Most banks will only offer an FHA, VA or USDA loan to people with credit scores of at least 640, but some smaller banks will consider applications at 620.

Even though FHA’s official rule is that you can qualify for a 3.5 percent down mortgage with a credit score as low as 580, banks are not offering mortgages to people with credit scores that low. If your credit score is below 620 you’ll need to work on increasing your score first, as well as save more cash. If you’re able to put down more than 20 percent, you may be able to find a bank that will offer you a mortgage.

So what should you do to improve your credit before applying for a mortgage?

Step 1: Check your credit report.

Your first step should be to get your credit reports from all three credit bureaus (Equifax, Experian and Transunion). You can order them for free at the government-run website Annual Credit Report.com. This is the only website that offers free credit reports with no strings. (Other sites might offer you a free credit report but require you to sign up for monthly services.)

Step 2: Challenge any errors on your report.

When you get your report, if you see any errors follow the instructions sent with the report for correcting errors. The credit reporting agency has 60 days to respond to you and will send a corrected report. If it’s still not correct, be persistent and send another letter disputing the report. You may find you need to dispute reports several times before they are correct, but it’s worth the effort to improve your score.

Step 3: Reduce credit card debt.

If you’re carrying large balances on your credit cards, pay them down. To get the best credit score you need a credit utilization ratio of 10 percent to 20 percent. You can calculate the ratio by dividing your total outstanding debt by your total available credit. For example if you have $2,000 of total debt on two credits cards that each has a $5,000 credit limit, your credit ratio would be 20 percent (2,000/10,000).

Step 4: Monitor your credit score.

While you’re working through the process of correcting your credit reports and paying down your debt, you can check what’s happening to your score for free at CreditKarma.com.

Step 5: Order your credit scores.

Once your report is accurate, you’ve paid down your debt and you think you’re ready to apply for a mortgage, order your credit scores at myFICO.com. That way you will see what your potential lenders see. if your score is over 640, most banks will approve a VA or FHA loan. If it’s below 640, you’ll need the help of a specialized broker. If your score is over 680 you’ll be able to consider both government-backed loans and private loans. Look at the numbers and see which one makes the most financial sense given your situation.

If your scores are too low, you may want to see if a parent or other family member will sign as nonoccupant co-signer. If you do plan to work with a co-signer, be sure to inform the broker that up front so he can steer you to the lenders that will approve a loan with a co-signer.

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Get property tax help from our experts.

 

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Source: http://realestate.aol.com/blog/2011/01/07/credit-scores-for-home-buyers-in-2011/

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We’re coming to the end of another wonderful year. It has been such an extraordinary pleasure to work with each of you in 2011, and I am looking forward to what next year will bring for us. I have never been more sure that this company is built on quality, not quantity, than when I [...]

Source: http://www.hassonblog.com/2011/12/see-you-in-2012/

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Filed under: News, Home Improvement, How To

By Lisa Frederick

We’re all for empowering homeowners to take on their own house improvements. You save money, gain confidence and get the satisfaction of custom tailoring your home with your own hands. But when it comes to certain tasks — plumbing, for instance — we draw the line. Although these 10 jobs might be within the scope of a very experienced owner, for most of us, they require help from someone who handles them for a living.

1. Foundation repair. If your foundation is in trouble, so is the rest of your house. Wall cracks, sagging ceilings or floors, lopsided doorways and other red flags add up to one solution: a call to a foundation contractor. It’s worth investing in professional help to ensure your house remains on sure footing.

2. Electrical wiring. We haven’t yet met a builder who thinks that wiring is a DIY job. That doesn’t mean you can’t replace an old ceiling fan or install a garage door opener — we’re talking about serious, behind-the-walls electrical work. Not only do you need thorough knowledge of the most updated building codes, but the worst-case scenarios are really, really bad (house fire, injury, death). Hire a licensed electrician for your own safety and peace of mind.

3. Removal of a load-bearing wall. Knocking out a wall sounds simple, right? Well, if it’s load bearing, meaning it carries and distributes weight, things get a lot more complicated. Eliminating such a wall wipes out support for the ceilings, floors and other structural elements that rest on it — and that can have disastrous consequences for the entire home. Plus, the wall could contain wiring or ductwork that you don’t want to disturb. Leave this tricky and time-consuming job to a remodeling contractor.

4. Major plumbing. Two words: water damage. You can probably install a new faucet, a showerhead or even a toilet, but when it comes to the bigger stuff, pro is the way to go. Pipe connections and other trouble spots can spring leaks that may cost you dearly in the long run. Here’s a good rule of thumb: If it involves work behind the walls, don’t try to handle it on your own.

5. Natural gas lines. Remember the worst-case scenarios with electrical work? Same with gas. It may sound simple to run a gas line directly to your grill or fire pit, but it isn’t. Call the gas company and thank us later.

6. Tile and tub resurfacing. Although this is an affordable alternative to ripping out and replacing dated tile or an old bathtub, don’t be tempted to save even more by trying it yourself. From the chemicals used to strip off the old finish to the delicate technique of applying a new one, it’s a specialized job that calls for specialized help.

7. Roofing. Besides the fact that roof goofs can wreak costly havoc if they leak, balancing on a steep slope of shingles with a toolbox is dangerous, especially if you’re not properly trained. Hire a roofing pro to be sure that the job gets done right and that you won’t face a treacherous fall.

8. Tree removal. Smaller trees (say, 10 or 15 feet high) are OK to cut down on your own, but anything larger should have you speed-dialing the tree service. First, amateurs and chainsaws rarely mix well. Then there’s the art of gauging where the tree will fall — miss the mark, and it could hit a power line or crush a wing of your house. And trying to balance up high while you saw off limbs is an ER visit waiting to happen.

9. Stripping old paint. Don’t take a chance with this one. Paint that dates from the late 1970s or earlier could contain lead, and breathing in the dust as you scrape it off may lead to health problems. Protect yourself and your family by turning the job over to a licensed lead-abatement contractor.

10. Wood-burning stove or fireplace installation. Fire safety is the biggest concern, but this also is an extremely complex job that requires an understanding of special considerations beyond the fireplace itself, such as insulation. Attempt it yourself, and you’re literally playing with fire. And you know what they say about that!

See the original story over at Houzz.

More on Houzz:
Browse 380,000+ Inspiring Home Photos
Houzz News: Remodeling Heats Up
Find the Right Architect or Designer for You

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Finds homes for rent in your area.

 

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Source: http://realestate.aol.com/blog/2012/03/30/10-home-fixes-that-require-a-pro/

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Filed under: Advice, Buying, Financing, Home Equity, Investing, Refinancing

Not that long ago, people bought one house and stayed put in it. After 30 years, they owned it free and clear, and this was a good thing, so went the thinking. Some folks celebrated with a mortgage-burning party, where they took a match to their mortgage papers and rejoiced.

Then along came the housing boom years, and the thinking changed. Only fools stayed put in one loan, let alone in one house. The pressure was on to buy bigger houses and/or refinance into even lower-rate loans; who cared if those lower rates lasted 90 days, let alone 30 years? Anyone who couldn’t keep pace would find themselves priced out of the housing market forever, we were told.

Well, forever came and went pretty quick.

Today, as people look to trim expenses and reduce household debt, you may be wondering whether to remain in the 30-year club or pay off your mortgage early if you can. The answer depends on many factors, including your stage of life and how strong a tolerance you have for its uncertainties.

Broadly speaking, experts say you should consider paying off your mortgage if:

• You are nearing retirement.
• You expect to stay in your house for at least several more years.
• You have enough liquidity from other investments to handle emergencies.

Let’s take a closer look at each of those considerations.

Retiring

Having a mortgage is a great tax deduction. But if you don’t have much taxable income — the largest taxable income is likely your paycheck — you may not need that deduction once you retire.

The other side of this coin is that if you won’t have income, it might be nice to not worry about paying for your shelter each month. Remember that you’ll still have property taxes, home upkeep and maintenance and, if you live in a condo, an HOA fee.

Deciding factor: Check with your accountant and determine the impact on your taxes of paying off your loan early.

Staying Put in Your House

This is a factor that depends on your age, health and family situation. Is your house suitable for you to age in place?

Things to consider are whether there are stairs, a bedroom on the ground floor, and room for a live-in caregiver should you need one. Is it near good health care and convenient for shopping? Close to family, friends and the activities you enjoy? If you anticipate limiting your driving, is the house in a location where you can get around by public transportation?

Deciding factor: The decision to move is one that can be made at any point; you don’t need to make it on the day of your retirement party. And as such, you also don’t need to rush to pay off your loan that day either.

Liquidity

You presumably have considerable cash reserves if you’re contemplating paying off your loan. Would investing that money elsewhere serve your interests better?

If you took the money you would use to pay off the mortgage and instead invested it in your 401(k) or IRA, would you get a better rate? “Use the money to build wealth,” said Wayne Bogosian, president of the PFE Group and the co-author of “The Complete Idiot’s Guide to 401(k) Plans.”

By paying off your mortgage, you are taking a highly liquid asset — your cash — and converting it into something far less liquid — home equity. Once your money is tied up in equity, the only way to get at it is through a home equity loan. In other words, the bank will charge you to use your money.

Deciding factor: Do you really have enough cash in your emergency fund and have fully funded your retirement? If not, save the match or find something besides your mortgage to burn with it.

For more insight on mortgages and related topics see these AOL Real Estate guides:

• Mortgage Jargon in Simple Terms
• How to Get a Low Mortgage Rate
  
• When to Refinance
• Four Ways to Benefit From a Cash-In Refinance

More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Get property tax help from our experts.

 

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Source: http://realestate.aol.com/blog/2011/06/23/pay-off-your-mortgage-early-it-depends/

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Filed under: News, Foreclosures

Remember “Flipping Out,” the Bravo series that brought us high-strung house flipper Jeff Lewis and his high-end portfolio of properties? Well, you can wipe that image from your mind. The new reality of the housing market brings us a new breed of wheeler-dealers: the Flip Men. And what kinds of properties do these guys flip? Why, foreclosures of course.

Mike Baird and Doug Clark buy foreclosed properties at auction, sight unseen. And what they’ll find when they get inside — usually by busting down the door or shimmying through a window, since “when you buy a house at auction, the auctioneer isn’t usually handing you keys and giving you a big kiss,” Baird says — is anyone’s guess.

So … meth house or mansion? Watch the video below to find out. And check out the “Flip Men’s 5 Foreclosure Tips” on AOL Real Estate. “Flip Men” premieres premieres Oct. 25 at 10:30 p.m. (9:30 p.m. CDT) on Spike.

Also see:
Viewpoint: Feeling Guilty About Buying a Foreclosure?
‘Mortgage Prof’: 5 Reasons Banks Would Rather Foreclose
Tempted to Invest in Real Estate? Read This First

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Source: http://realestate.aol.com/blog/2011/10/25/mansion-or-meth-house-flip-men-want-to-know/

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Filed under: News, Advice, Economy, Financing, Refinancing, Selling, Credit

“Why won’t the bank just reduce the amount of my loan instead of taking my home and then selling it to someone else for way less than I would have been happy to pay?” It’s a question that gets asked repeatedly these days, especially by people who are facing foreclosure or are upside down on their mortgages.

For the answer, we turned to Jack Guttentag, the Mortgage Professor and Inman columnist.

Guttentag believes that lenders have been too stingy when it comes to reducing loan balances. Private lenders have offered loan reductions only sparingly, he says, and Fannie Mae and Freddie Mac not at all.

Here’s the professor’s take on why homeowners can’t catch a break on loan reductions.

1. The buck stops there.

The decisions to reduce principal loan amounts are made by the firms that service mortgages — the same folks who brought the country the robo-signing scandal. As servicing firms, anything they decide must be in the financial interest of their client — that’s your lender, not you. If they depart from customary practice — and writing down loan balances is a departure from customary practice — the buck stops with them, Guttentag says. In other words, who’s going to take the risk of reducing Joe Homeowner’s loan amount and then have to explain it to the boss? To take Nancy Reagan out of context: They just say no.

2. Banks are in the business of making money.

No lender is going to write down the balance of a loan in default just because you owe more than the home is worth. Truth is, there is no benefit to the lender to helping Joe Homeowner keep his house instead of selling it to the next guy. Plus, to help Joe would eliminate the possibility that the bank could also get a deficiency judgment against him. Banks are in this for the squeeze and think of Joe as just the orange. Nothing personal, of course.

3. In this economy, you will likely default anyway.

Sure, you want to believe that the economy is going to turn around and the value of your home will again rise to what you paid for it. After all, hasn’t listening to a fairy tale been a surefire way to fall asleep?

From the lender’s standpoint, the only reason to write down a loan balance is that it will reduce the chance that you will default. And evidence has shown that people who are heavily underwater — that’s deep in negative equity territory — are more likely to default than those who aren’t. Truth is, negative equity discourages people from making their mortgage payments. They figure: Why keep throwing good money after bad?

4. Banks are short-staffed and the staff they do have is untrained.

Most interactions between mortgage borrowers and servicers are handled by computers or relatively unskilled employees, says Guttentag. Borrowers in serious trouble are referred to a smaller number of more skilled and specialized employees, but until you enter the red zone, you are likely to encounter frustration.

Guttentag says that at the onset of the mortgage crisis, servicers were caught short-handed and the sheer volume of foreclosures in the pipeline hasn’t allowed them to catch their breath.

5. Mortgage insurance works against you.

When mortgages carrying mortgage insurance go to foreclosure, banks are protected up to the maximum coverage of the policy, which generally is enough to cover all or most of the loss. This discourages modifications, says Guttentag. Why would a bank do a modification for $15,000 if the $40,000 foreclosure cost is going to be paid by the mortgage insurer? Even if the insurance coverage falls short of the foreclosure cost, the shortfall has to exceed the modification cost before modification becomes financially more attractive.

So there you have it. A five-point plan for keeping homeowners on the hook for that hefty loan balance.

Also see:
Viewpoint: Where’s Housing in the ‘Occupy’ Protests?
Mortgage Mod Hell: Trapped Between Lenders, Collectors
The Mortgage Fix That Can Save the Economy

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More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
Find homes for rent in your area.

 

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Source: http://realestate.aol.com/blog/2011/10/18/mortgage-prof-why-banks-foreclose-instead-of-settling-for-les/

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