When it comes to eventually moving into that dream home you’ve always wanted, keep in mind that many of the choices we make on a house are really driven by lifestyle desires, rather than lifestyle needs. More bedrooms means more time to clean, more expensive to repaint and carpet/floor in the future. The bigger the house and the larger the lot, the more you’re going to pay for it both in time and financial resources. The main three decision factors are larger lot, more space and more stuff. Each of these come with a price tag.

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

search for : dream home, bedrooms, down payment

TO hear some people in the real estate industry tell it, one of the biggest problems with the housing market is what is being said about it in the news media. Agents and industry executives say reporters, editors and news anchors are making a cooling market sound worse than it is. While the number of sales may have dropped from 2005 (which was a record-setting year, the end of a five-year run) and more homes stay on the market longer, real estate professionals note that sale prices in much of the country are still higher than they were a year ago.

Many journalists who cover the real estate market said they expected, and were not worried by, criticism from the industry. They said they were more concerned about whether the news media were skeptical enough about the boom while it was continuing. “We were late to the savings and loan crisis and we were definitely late to the dot-com crash,” said Bradley J. Inman, publisher of Inman News, a real estate news service, who said he believed that the news media have done a better job covering the housing boom. Some critics say the news media did not include enough contrary viewpoints during the run-up in home prices. (more…)

search for : real estate industry, real estate, savings and loan crisis, dot-com crash

Many headlines and cable news programs are touting a pending real estate bubble. Sure this helps increase their ratings, but there are too many factors in favor of real estate to worry about the naysayers. All you have to do is look back to the early `90s. In the early part of the decade, prospects for real estate investments were looking about as good as they are today. After Japanese investors paid extravagant prices for Hawaiian hotels and Los Angeles office properties sent the real estate market climbing, the `80s real estate boom was topped off when a Japanese consortium purchased the iconic Pebble Beach golf course for $500 million.

The examples above are just a few of the national real estate players. On the local level, I know there are thousands of individual investors and real estate speculators that have been piling up cash while waiting for housing prices to begin to fall. Once they start falling, these investors are going to have to outbid each other to get their hands on these depressed properties. One final point is that houses have utility value. That’s economic parlance for a tangible use. After all, you can live in a house. Other examples of items with utility value are a hammer (because it can hammer nails) and a washing machine (because it washes clothes). These items have value as tools to make your life easier. (more…)

search for : real estate investments, Japanese investors, real estate

U.S. mortgage applications rose for a second consecutive week as demand for home purchase loans hit its highest in two months, an industry trade group said on Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity , which includes both refinancing and purchasing loans, for the week ended Sept. 8 increased 3.2 percent to 584.2 from the previous week’s 566.3, its highest since mid-May.

Dean Maki, chief U.S. economist at Barclays Capital in New York, said the indexes tend to volatile but if the trend continues it will be good news for the U.S. housing market. “One never wants to make too much out of one week’s data,” he said. “If this index were to consistently move above 400 it could be an early sign of stabilization in home sales, but it is too early to draw any conclusions from one week.” Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.32 percent, edging up 0.01 percentage point from the previous week. Interest rates were above year-ago levels of 5.72 percent, but below a four-year high of 6.86 percent touched in June. (more…)

search for : mortgage applications, Mortgage Bankers Association, U.S. housing market, 30-year fixed-rate mortgages

While a growing number of consumers are looking to cash in on the changing real estate market, another group is trying to figure out how to keep from cashing out. The 115,292 homes nationwide entering some stage of foreclosure in August remains historically low, but the rate of increase in the number is becoming alarming. August foreclosures represented a 24 percent increase from July — the second highest this year — foreclosures are up 38 percent for the year so far and 53 percent compared to where they were this time last year.

Blame it on those nasty mortgage IEDs (Improvised Equity Devices) — high leverage, high risk loans that are easy to come by, but financially explosive as time goes by. Mortgage IEDs are typically ARMs, in a host of varieties, that typically start off with low rates, but, in this market, continually adjust upward. Along with the higher interest rate, so goes your monthly mortgage payment. When the loans come with interest-only payment terms, if you only pay the interest and your home value shrinks, your mortgage could become larger than your home’s value giving you no room to bail out without coming up with the cash to cover the difference. (more…)

search for : real estate market, oreclosures, Improvised Equity Devices, ARM, monthly mortgage payment, interest-only payment

Applications to refinance accounted for close to 40 percent of all mortgage applications in August, according to the Mortgage Bankers Association. And many of those refinancing are homeowners who are watching their once-attractive adjustable-rate mortgages head skyward. Here are answers to a couple of refinancing questions that might strike a chord with many facing similar situations.

The decision to refinance out of your 5/1 adjustable-rate mortgage into a fixed-rate product depends on how long you plan on being in the house, your attitude toward risk and your outlook on interest rates. If this is a starter home or you plan to downsize in the next three to five years, then staying in a 4.5 percent loan during the next three years makes sense. If you plan on staying put, then you need to consider refinancing while 30-year fixed rates are still below 7 percent. If your mortgage has an annual cap of 2 percent and a lifetime cap of 9.99 percent, it would be at least 2010 before your mortgage rate could hit 8.5 percent. Although that’s about 2 percent higher than current 30-year fixed-rate mortgages, you’re not paying any refinancing costs or expenses to stay in your current loan.
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search for : mortgage applications, Mortgage Bankers Association, adjustable-rate mortgages

Mortgage Bankers Association reports that activity index increased for the second straight week, hitting its highest level since mid-May.

U.S. mortgage applications rose for a second consecutive week as demand for home purchase loans hit its highest level in two months, an industry trade group said Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and purchasing loans, for the week ended Sept. 8 increased 3.2 percent to 584.2 from the previous week’s 566.3, its highest since mid-May. Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.32 percent, edging up 0.01 percentage point from the previous week. Interest rates were above year-ago levels of 5.72 percent, but below a four-year high of 6.86 percent touched in June. (more…)

search for : Mortgage Bankers Association, mortgage applications, refinancing, 30-year fixed-rate mortgage

The number of homes entering into some stage of foreclosure is surging, according to a survey released Wednesday. In August, 115,292 properties entered into foreclosure, according to RealtyTrac, an online marketplace for foreclosure sales. That was 24 percent above the level in July and 53 percent higher than a year earlier.

California foreclosures are increasing at an even faster annual rate, up 160 percent since last year to 12,506. And the formerly red-hot Nevada market recorded a spike of 24 percent compared with July and a whopping 255 percent increase from August 2005. Rick Sharga, RealtyTrac’s vice president of marketing, says the rising foreclosure numbers are in part the result of rising monthly payments on adjustable-rate mortgages, which have a low introductory interest rate that heads higher after an initial period. “Usually, foreclosures are a lagging [market] indicator,” he says. “But we’ve never had a situation like this with adjustable-rate mortgages amounting to $400 billion to $500 billion coming up for adjustment over the rest of the year.” For a homeowner with a 5/1 ARM that’s now resetting, the adjustment could add at least two percentage points to the interest rate. That could send the payment on a $200,000 loan up from about $950 a month closer to $1,200 - $250 more each month. (more…)

search for : foreclosure, foreclosure sales