Interest Rate Watch

  • 30 yr fixed: 4.78%
  • 15 yr fixed: 4.21%
  • 1 yr adj: 3.95%

(U.S. Daily Averages)

– Copyright © 2010 Realty Times. All Rights Reserved.

Plenty of Reasons to Buy a Home Even After the Tax Credit

Written by Realty Times Staff

Even though the home buyer tax credit expired on April 30 and won’t be renewed, there may never be a better time to buy a home than today, according to the National Association of Home Builders (NAHB). Many outstanding opportunities still exist for home buyers, but they may not be around forever.

“The home buyer tax credit was just one of many factors motivating Americans to buy homes,” said NAHB Chairman Bob Jones, a builder and developer in Bloomfield Hills, Mich. “But buyers can still take advantage of today’s low interest rates and competitive prices to get a home they may not have been able to purchase just a few years ago.”

Besides mortgage interest rates that have been hovering at near-record lows, homes in many markets have become more affordable. Prices have moderated from the highs of the housing boom that occurred in most of the country, especially in major markets where they had increased significantly.

Today’s new homes are also built to be much more energy efficient than homes constructed a generation ago, making them more affordable to operate. New homes are designed to support modern lifestyles with open floorplans, flexible spaces, improved safety features, and low-maintenance materials.

Consumers who are thinking about buying a home should not count on interest rates or prices staying at current levels, however. Mortgage rates are sensitive to market conditions, and even a slight increase can push monthly payments beyond a family’s budget. As the country recovers from the recession and people stabilize their financial situations, NAHB economists expect that home prices will begin to increase by 2011.

NAHB’s home buyer brochure “Opportunity Knocks for Home Buyers” describes many of the opportunities in today’s market, as well as the long-term financial benefits of homeownership. It provides examples of how interest rates affect monthly mortgage payments and the typical federal tax savings over the first five years of homeownership. The brochure can be downloaded from NAHB’s web site at: www.nahb.org/homebuyerbrochure.

The home buyer tax credit is still available for eligible home buyers who had a signed sales contract by the April 30 deadline and who close by June 30, 2010, as well as for qualified members of the military, foreign service and intelligence communities, who have until April 30, 2011, to sign a contract.

– Copyright © 2010 Realty Times. All Rights Reserved.

Seniors Looking to Downsize, Seek Opportunities to Socialize in Urban Areas

Written by Phoebe Chongchua

Aging baby boomers want to feel connected. As many decide to downgrade the size of their current home, they search for a new one. However, it’s more than just their living quarters that makes them want to buy.

“I think previously there was this preconceived idea that senior citizens retire and they move to Florida or Arizona or they move somewhere to a senior citizen community,” says Steve Matthews, a real estate industry expert and chair for the Montclair Senior Citizen Advisory Committee in New Jersey. But he says there’s a changing mindset emerging. “Senior citizens no longer want to be in an isolated place.”

Many are selling their homes and looking for a community connection in the location where they plan to purchase their next home. “Like the rest of America, there was this movement going out toward suburbia. Now, there’s a movement going back toward more urban areas and towns are starting to be challenged,” says Matthews.

His town, Montclair, is a 30 – minute train ride from New York City. “So, it becomes a commuter town for people who work and it’s always been known as a town where young families go and buy. But now we’re seeing seniors who would previously move down to South Jersey or move somewhere else, choosing to stay closer to home,” says Matthews.

And that means that towns like Montclair need to understand the changing needs of its residents.

There are multiple factors causing the desire for urban living. Extended family living under one roof and caring for each other, low – maintenance condos, and social connectivity are a few reasons that top the list.

“Towns aren’t used to having to provide other services for seniors. Many towns have always focused services toward children – school systems, park systems, and things like that. Now, towns are being challenged to provide support systems for seniors who are choosing to retire in place,” says Matthews.

As more seniors shop for smaller, easy – to – maintain homes, that puts them in the same market as first – time buyers. However, seniors often have one distinct purchasing advantage. “A lot of them are selling their home, so they’re cash buyers and that makes them a stronger buyer in this market,” says Matthews.

Some seniors tend to be interested in homes that are completely renovated or upgraded. But Matthews says he encourages seniors to look at homes that might need some remodeling because they may get a better deal. Then the buyers can renovate the home in a way that is most suitable for their needs.

For sellers looking to market their property, Matthews says there are some specific items that tend to appeal to this group such as, buildings with doormen and onsite maintenance staff, alternate transportation such as a senior shuttle or bus stop nearby, and ‘lock and leave’ homes (baby boomers are adventurous and like to have the ability to easily leave for travel). Studies show this group also likes smaller quarters. They’re willing to get rid of extra stuff and live freely, yet comfortably which is why condos, active adult communities, and city apartments are highly appealing.

According to the Over – 50 Council of the National Association of Home Builders, as much as 6 percent of people between the ages of 55 and 64, move every year.

– Copyright © 2010 Realty Times. All Rights Reserved.

Common Buyer Fears

Written by Carla L. Davis

Whether you are a first time home buyer or someone who is looking to move up or down, getting into the market can be a fearful time.

Here are some of the most common buyer fears:

Do I have enough money to buy a home?

To first step to finding out how much home you can truly afford is to get pre-qualified for a mortgage.

Also, take a step back and look at your finances. Ideally, you should have around 20 percent of the purchase price to put down. You should also have less than a 36 percent debt to income ratio. Be sure to include all of your monthly obligations in that equation, including student loans, child support payments, alimony, car payments, credit cards, etc.

Once you’ve looked at your savings, make sure that apart from your down payment, you’ll have enough left over to pay closing costs, which include such things as attorney fees and transfer fees. The National Association of Realtors (NAR) reports that this amount averages between 2 and 7 percent of the home price. You also need to have money left as a cushion. What if unexpected repairs, either to your house or car, come up? What if you or a family member needs medical attention? Be sure that you have enough money leftover after the purchase to keep your life running smoothly.

Will I have buyer’s remorse?

There is no such thing as the perfect house, so you should prepare yourself for some mild feelings of “what if”. You may have to give up a few “wants” to get a few “needs” when you buy your next home. Or if this is your first purchase, you may have to buy something a little short of your dream house, and build equity in order to move up at a later date. Try not to lose sight of the big picture. This is a home that you own. You now get the benefits of tax breaks. You are building equity as you pay off the loan. And, hopefully, your home will appreciate in value over the coming years.

How can an unhandy owner handle repairs?

Before you swear off doing some of your own projects or repairs, know that everyone starts somewhere. Take a class at your local home improvement store, invest is a handyman’s guide, or ask a friend that has already tiled their bathroom or fixed a leaky sink to come and give you some pointers.

Be prepared for repairs, maintenance, and updates. Even with a new home, there will be projects. Plan accordingly financially. And if all else fails, hire a professional.

What if I need to move?

Experts recommends that to build equity, you need to have owned your home for at least 3 to 5 years. The NAR recommends, “Look at your annual mortgage statement or call your lender to find out. Usually, you don’t build up much equity in the first few years of your mortgage, as monthly payments are mostly interest, but if you’ve owned your home for five or more years, you may have significant, unrealized gains.” If the time is less than five years, then you should be prepared to not make any money on the sale of your home, and even, to “lose” some — in the form of closing costs.

– Copyright © 2010 Realty Times. All Rights Reserved.

Green Your Home with Cost-Saving Remodeling Tax Credits

Written by Realty Times Staff

As the 40th anniversary of Earth Day was celebrated last month, the National Association of Home Builders (NAHB) reminds home owners that they can use fewer resources and save money by taking advantage of federal energy efficiency tax credits through the end of the year.

Home owners who purchase qualifying water heaters, windows, air conditioning units and other appliances, insulation and roofing can be eligible for tax code section 25C tax credit, equivalent to 30 percent of the cost. There’s a $1,500 overall limit for purchases made in 2009 and 2010.

“You can save money, save energy, and be a good steward of the Earth’s resources,” said NAHB Remodelers Chair Donna Shirey, a remodeler in Issaquah, Wash. “I can’t think of a more appropriate way to commemorate Earth Day.”

Carolyn Taylor of Columbia, S.C., enjoyed Earth Day with a new tankless water heater that supplies plenty of hot water for her active family of four. Remodeler and NAHB member Pete Williams of ATherm Remodeling in Columbia suggested the switch because it was less expensive than relocating her existing gas water heater during a whole-home renovation project.

When Williams told her about the energy-efficiency tax credit the family would also enjoy, that was the icing on the cake, Taylor said. “Any time you can do something that makes a home more energy efficient and saves you money, of course you should do it,” she said.

Remodeler Shawn Nelson in Burnsville, Minn., helped home owners combine the federal credits with a state program that offered rebates for qualifying windows as part of renovation projects he completed over the winter. Home owners can visit www.dsireusa.org for a list of incentive programs where they live.

In a statement last week to the House Ways and Means Committee, NAHB urged Congress to extend the section 25C credit past its December expiration date and to reinstate the section 45L $2,000 tax credit for builders of energy-efficient homes, which expired at the end of 2009.

A more generous credit for appliances that use renewable energy is in effect through 2016. The section 25D credit applies to 30 percent of the total cost of solar panels for electricity or hot water, wind power equipment and the installation of geothermal heat pump systems. This credit can be used in conjunction with new or existing homes.

“These renewable systems are more expensive up front, but may offer significant savings in the long term,” said NAHB Chairman Bob Jones, a builder in Bloomfield Hills, Mich. “Both the 25C and the 25D credits are worth investigating, and you’ll get helpful information from the NAHB Web site, your local home builders association or the NAHB Remodeler member you choose to help you with your renovation and improvement plans.”

– Copyright © 2010 Realty Times. All Rights Reserved.

Interest Rate Watch

U.S. averages as of April 30, 2010:

  • 30 yr. fixed: 5.06%
  • 15 yr. fixed: 4.39%
  • 1 yr. adj: 4.25%

– Copyright © 2010 Realty Times. All Rights Reserved.

Five Key Areas to Pay Attention to When Buying a Home

Written by Carla Davis

Looking for a new home can be exciting and frustrating. You can help alleviate the frustration by paying close attention to five key areas of the homes you’re considering buying; it may save you money in the long run.

Don Walker is an inspector and owner of Ace Home Inspections. He says there are five areas in homes that he frequently reports problems with. They are electrical, foundation, plumbing, the attic, and landscaping.

Electrical

Walker says sometimes homeowners assume with newer homes that all will work just fine but that’s often not the case. “I inspected a brand new house—four years old but the electrical was all done incorrectly,” says Walker.

Having a complete home inspection will help to rule out any problems and point out any areas of concern. However, even as you’re browsing homes, buyers can start to make note of the key areas that Walker mentioned, such as the foundation.

Foundation

Walker says a four-year-old home he inspected recently was already showing trouble signs which could result in a costly repair project. “It was a model home. What the homeowners did was plant trees for shade to make it look really nice, but they planted the wrong trees and they’re going to crack the foundation and it’s going to cut the property value down by $50,000,” says Walker.

Walker says in the case of that home, the trees were causing micro-fractures in the tile in various locations of the home. “As you walk through the house, 21 feet in and 30 feet deep, there’s just too much root invasion and it’s going to ruin their tile,” explains Walker.

He says some tell-tale signs with this home were the minor cracks in the foundation that were causing a lifting and separation of the foundation. Also, the windows were not opening and closing properly, “which means the foundation is moving.”

However, just because you see cracks doesn’t mean there is a foundation problem. “Most people don’t understand that there are natural cracks in a house. That’s why when we do an inspection report we have to look at it and say ‘Okay, this is a typical crack and this one is an untypical crack,'” says Walker. He says some cracks may lead to other problems while others won’t.

Plumbing

Walker says another big area of concern is the plumbing. It’s an area that you can’t always spot as easily but it can create expensive repairs if plumbing issues go either undetected or are not properly fixed. “Mold forms underneath sinks when people have a leak and they fix the pipe but they don’t take care of the mold,” says Walker.

He says things like caulking the sink can help prevent mold. “That’s my number one thing I always find—bad sinks,” says Walker.

He says that when you look at the sink, look behind it and most of the time you will discover a little crack. “What happens is, when you wash dishes or you wash your hands in the bathroom or the kitchen, the water gets in that crack and seeps down. Once the water gets behind the cabinet it’s in a perfect position to create mold,” says Walker. The dampness, humidity, and lack of light can turn that area beneath the sink into a mold-breeding ground.

Attic

“You can tell everything about the house by the attic,” says Walker. He says other areas of the home can be covered up if a repair had occurred. For instance, if there was a leak and it damaged a wall, with the right contractors and repairs it can be made to look like new and, hopefully, function like new. But Walker says the attic is sort of the eyes to the soul of the home. “In the attic you can tell where all the damage has been,” says Walker.

“If you’re in a 20-year-old house and you see that the insulation is brand new, you know that there was a water leak because it had to be replaced,” says Walker. He adds, “You can tell if the roof is good because you can look right at the wood.”

Landscaping

“There should not be moisture or plants next to your house,” says Walker. He says there should be a 12 inch barrier between the landscape and the house. Walker says otherwise you run the risk of having the foundation crack and affect the home. What happens is, as the landscape that is too close to the home is watered, the foundation and soil expand. Then, when no watering occurs, the foundation dries up and shrinks and this can cause it to crack.

Remember, knowledge is power, so learning about the home before you close the deal on it will keep you from making a mistake that may cost you extra out-of-pocket money later.

– Copyright © 2010 Realty Times. All Rights Reserved.

Homeowner Advice: Housewarming Party Etiquette

Written by Carla L. Davis

Buying a home can be the single largest purchase of a lifetime. And in our society, celebrating that purchase is a common and happy occurrence.

But questions arise as to what are the proper procedures and etiquette regarding a housewarming party. Can you throw the party yourself? Are gifts mandatory? When should the party happen? And can renters throw a housewarming party? These are a few of the questions that we’ll cover in this article.

The first tip from the experts is to wait to have your party until you are actually settled into the house. Sometimes new homeowners are so excited to share their new life that they jump the gun. You don’t want to be searching for a serving spoon or a mixing bowl when your guests are arriving. And you also don’t want them walking a maze around boxes and disorganized furniture.

The next consideration is who plays host and organizes the party? You should feel completely comfortable in hosting your own housewarming party, if done with the right intentions. Housewarming parties shouldn’t be done with the intention of getting gifts, just as a wedding shouldn’t take place in order to get presents. If there are items you’d like to have, you could consider registering for gifts. Gifts, however, should probably not be requested or suggested as mandatory. And registry information should not be included on the invitation. There will be guests who will bring offerings, regardless if you register, request, or not.

Along those same lines, if you have a good friend or family member that has settled into a new home, you may consider stepping up to the opportunity to play host. This should be considered an honor. Whoever plays host will send out invitations, or e-vites, and plan the festivities, including cocktail menu and food. A low key affair can be just as fun as something more involved. Consider throwing a fair weather barbecue as one option.

Should a renter have a housewarming party? Sometimes buying just isn’t in the cards. In this instance, it may be better to throw a simple party, without the pretenses of it being a housewarming party. Your friends and family can still bring gifts if they want, but without feeling the obligation of buying a present for a landmark experience.

What make a good housewarming present? This can be tough, especially if the host hasn’t registered for gifts or if you don’t know the host’s taste. Some great gifts that have a hard time going wrong are: candles, wine or champagne, potting sets (seeds, trowel, and pot), or even gift cards to local home stores and home improvement stores.

As a guest to a housewarming party, it would be good manners to gift the new homeowner. Even a simple gift like those outlined above would be perfectly suitable. If you can’t afford a gift at this time, consider writing a handwritten note congratulating the new homeowner.

A housewarming party is a great time to celebrate one of life’s greatest joys, owning a home

– Copyright © 2010 Realty Times. All Rights Reserved.

Just Say No to Bidding Wars

Written by Jim Adair

Real estate sales are still booming in urban areas nationwide, as buyers get into the market before mortgage interest rates go up. With rates still hovering at near historic lows, it’s a great time to buy. However, it is also creating bidding wars for homes in neighborhoods across the country, driving prices up and leaving would-be buyers angry and frustrated after they are unable to get the home they want.

Losing a house you had your heart on buying is emotionally draining and it can also be costly if you’ve spent money on a home inspection and gone to the trouble of getting a certified check for the deposit. A recent survey by pollster Harris/Decima, conducted for BMO Financial Group, found that 15 per cent of homebuyers have been in bidding wars, and of those who didn’t get the home, 14 per cent say it caused them to overspend on their next offer.

Some bidding wars happen because a particular house strikes the fancy of a number of buyers who love a specific neighborhood or feature of the home. But encouraging multiple offers on a home is also a marketing tactic used by some real estate agents, who under-price the home and state they will not accept any offers until a specified time. The goal is to get a number of offers simultaneously and take the best one.

In many cases, unsuspecting buyers get excited about buying a home that seems to be in their price range, when it’s likely to sell for much more than they can afford. Once buyers discover they have competition for the house, they may already have an emotional and financial investment in the house (if they’ve paid for a home inspection) and it prompts them to push up their bids. In one city, some would-be buyers reportedly sent the sellers photos of themselves and their children, along with flowers and candies, in an effort to boost their offer. This is all great news for the seller, right?

Maybe not. Some agents say that multiple offers don’t necessarily net a higher price than if the home had been put on the market at its fair market value in the first place. Often many of the bidders can’t afford the home and are only involved because the house was priced so low in the first place.

Others argue that the under-pricing strategy is sleazy and unethical, because the seller has no intention of accepting an offer at the listed price. But real estate agents defend the practice as a way to get the best price for their client, which is their contracted duty. Sellers have the right to list their property for whatever price they wish.

Some of the under-pricing policies are extreme, including listing homes for sale for $1 and waiting for offers. A couple of years ago there was also a controversy in one city when an agent complained that “phantom offers” were being invented by agents to make it seem like there was competition for a home when none existed. A local Real Estate Board task force investigated the claims and determined that the law had provisions in place to prosecute any agent who was found guilty of this activity.

So if you’re shopping for a home and have fallen in love with that impossibly cheap home in a great neighborhood, how do you know if you should place an offer?

First of all, remember the old adage that if it sounds too good to be true, it probably is. Educate yourself about value of homes in the community by looking at the sale price of comparable homes or finding out from your real estate agent what other homes sold for recently. If it’s clear that the house is being underpriced to create multiple offers, you have a choice to make. You can play the game or walk away.

There’s a lot to be said for refusing to participate in bidding wars. Normally when you are thinking about buying a home, there’s time to look at the place carefully, come back a few times to make sure it’s what you’re after, compare it to other homes that are on the market, and have a home inspection done on the property. In a bidding war, you may not have time to do any of this. If you are bidding against others, you likely will have to come in with a “clean” offer – meaning no conditions. If there isn’t time to get a home inspection done before the offer deadline, you may have to buy without one. Your dream home may have all kinds of hidden problems.

It’s also good to remember that bidding wars are not happening everywhere. They are generally confined to the most popular neighborhoods or condo buildings. There are lots of other great properties available for sale, and although listings were in short supply early in 2010, they are now increasing every month. Look around and you might find something you like even better than this one.

What if you are absolutely sure this is the house of your dreams and you HAVE to have it?

First, before you even start looking, get a preapproved mortgage. Shop around among banks, mortgage brokers and financial institutions to get the best deal, and you’ll know exactly how much you can afford to spend and when to say no. Your total housing costs including mortgage payments, property taxes and utility payments should be no more than one-third of your household income.

For the best shot at getting the house, make an offer over the asking price. The more offers that are coming in, the more you’ll have to pay. In a bidding war you must make your best offer immediately because you may not get a second chance. Try to meet the homeowner in person at some point and get to know them a little – it can’t hurt. Put as few conditions in the offer as possible. Use the closing date that the vendor is seeking. Come up with a hefty deposit, in the form of a certified check, to show the vendor you are serious.

In the end, if you don’t get the house, just relax and let it go. Don’t worry – you’ll find another one!

– Copyright © 2010 Realty Times. All Rights Reserved.

Does Moving Up Make Sense?

Written by Realty Times Staff

The following are some questions that will help you decide whether you’re ready for a home that’s larger or in a more desirable location than your current one.

If you answer yes to most of the questions, it’s a sign that you may be ready to move.

  • Have you built substantial equity in your current home? Look at your annual mortgage statement or call your lender to find out. Usually, you don’t build up much equity in the first few years of your mortgage, as monthly payments are mostly interest, but if you’ve owned your home for five or more years, you may have significant, unrealized gains.
  • Has your income or financial situation improved? If you’re making more money, you may be able to afford higher mortgage payments and cover the costs of moving.
  • Have you outgrown your neighborhood? The neighborhood you pick for your first home might not be the same neighborhood you want to settle down in for good. For example, you may have realized that you’d like to be closer to your job, relatives, or live in a better school district.
  • Are there reasons why you can’t remodel or add on? Sometimes you can create a bigger home by adding a new room or building up. But if your property isn’t large enough, your municipality doesn’t allow it, or you’re simply not interested in remodeling, then moving to a bigger home may be your best option.
  • Are you comfortable moving in the current housing market? If your market is hot, your home may sell quickly and for top dollar, but the home you buy also will be more expensive. If your market is slow, finding a buyer may take longer, but you’ll have more selection and better pricing as you seek your new home.
  • Are interest rates attractive? A low rate not only helps you buy a larger home, but also makes it easier to find a buyer.

– Copyright © 2010 Realty Times. All Rights Reserved.