I bought a home in California in February 2006 for $400,000. I financed with a 10-year [tag]interest-only mortgage[/tag] with a rate of 6 percent and a 15-year [tag]equity loan[/tag] with a rate of 9¼ percent. I would like to make extra [tag]monthly principal payments[/tag] on one of the two loans but don’t know which one it would make more sense to pay extra on. Please advise.

Figure out if either loan has a prepayment penalty associated with additional principal payments. It’s possible that, even for loans with a [tag]prepayment penalty[/tag], you can make some additional principal payments and it won’t trigger the penalty. An extra $100 per month, for example, may not trigger a penalty. With no penalty to consider, it’s a slam-dunk to pay down the loan with the higher interest rate. Even though the lower rate loan is interest-only, making additional [tag]principal payment[/tag]s saves you the interest expense on that payment. You’d rather save 9¼ percent on the additional principal than 6 percent. (more…)

For Bob and Judy Bartlett, a 4,700-square-foot home on two acres in Durham, N.C., no longer made much sense after their two children had long since moved out. Meanwhile, the retirees were spending more time at a second, [tag]lakefront home[/tag]. So several years ago, they began thinking about selling their primary house and buying something smaller. But it wasn’t easy to make the break; the couple had called the Durham property home for three decades and were unhappy about the prospect of moving away from close friends.

For many older adults, walking away from a home is among the most difficult decisions in later life — even when a move makes economic sense. In a recent survey of retirees, Fidelity Investments’ Fidelity Research Institute found that 43% didn’t want to cash out the equity in their home because they wanted to live where they are “comfortable.” An additional 9% explicitly cited “sentimental” reasons. “There are big emotional barriers to selling…and those barriers appear to grow as you age,” says Guy Patton, who heads the Fidelity group.
The [tag]Fidelity Research Institute[/tag] considered the outcomes from seven different strategies for a hypothetical 75-year-old couple who own a $400,000 home and need to pull out cash. The options included major steps like selling the home and [tag]buying a smaller house[/tag], as well as less-dramatic moves, such as taking out a reverse mortgage. Fidelity calculated that the couple could pull anywhere from $18,000 to $307,000 out of their home over the remainder of their lives depending on the strategy. (more…)

While the [tag]subprime lending[/tag] industry’s woes have kicked up dust in the past few weeks, observers say the problems underlying the bad news have been percolating for much longer. In December, the Washington, D.C.-based [tag]Mortgage Bankers Association[/tag] said 12.6 percent of subprime mortgages were 30 or more days delinquent in the quarter ending in September, compared with 4.7 percent of all mortgages. That was an increase from a 10.8 percent delinquency rate for the third quarter of 2005.

A resurgence in the housing market and lower interest rates would certainly help as well, but that assumes the industry can recover quickly enough to keep banks interested in underwriting people with questionable credit. “If the investment banks and larger institutional lenders are afraid to lend … the money to underwrite subprime loans on a short term basis, that’s the concern we have with these companies,” said Morningstar analyst Ryan Lentell. “If they can’t finance new loans, that would have a detrimental effect. That’s what has led a lot of these companies to leave the business.” Some lenders are trying to show they still have control over the situation, saying they’re tightening credit requirements or are selling off the worst of their loans. They say the loans sold in 2006 should be the bottom of the barrel and the ones sold in 2007 will be much more reliable. (more…)

If you’re in the market for a new home, you figure it must be less expensive to buy now than when rates go up even further, assuming housing prices stay strong in the near term, something economists expect will happen. That may be the only thing you can be sure about. But finding the best type of mortgage for your situation can feel a little like finding the perfect ecru in a sea of beige. It doesn’t have to be that way. If you ask yourself the right questions, you at least can narrow your search to the best category of[tag] mortgage[/tag] for which you need to comparison shop.

Keep in mind, your [tag]mortgage payment[/tag] is only part of what you’ll pay to live in your home. You also should budget for furniture, your house’s upkeep and the general expenses of life (like, say, food). A [tag]30-year mortgage[/tag] will have a lower monthly payment and a higher interest rate than a [tag]15-year mortgage[/tag]. So you’ll have a smaller monthly obligation but you’ll pay more for your house over time because you’re paying it off with interest for a longer period. Conversely, a 15-year mortgage will have a higher monthly payment and a lower interest rate so you’ll pay less for your house because you’re paying it off in a shorter period. “For most home buyers, especially first-time buyers, taking a 15-year (or 20-year) mortgage is out of the question,” said Keith Gumbinger, vice president for mortgage tracker HSH Associates. The higher [tag]monthly payment[/tag]s are often too much to handle for these types of buyers. (more…)

New legislation on Capitol Hill seeks to curb an increasingly popular mortgage practice: providing home loans to applicants using their [tag]Individual Taxpayer Identification Number[/tag]s ([tag]ITIN[/tag]), in lieu of Social Security numbers. ITINs are issued by the [tag]Internal Revenue Service[/tag] to [tag]immigrant worker[/tag]s who do not qualify for Social Security numbers for use when they report their income and pay federal taxes.

Dozens of banks around the country have begun offering home mortgages to undocumented immigrants using ITINs, but their programs generally have been low-key and small. Bank of America stirred controversy earlier this month when it announced a pilot program in Los Angeles to provide credit cards to resident immigrants who lack Social Security numbers but have ITINs. Some critics charged that the bank was seeking to profit by helping illegal immigrants who should be deported or prosecuted, not extended consumer credit. Bank of America said its program is legal and may be rolled out nationwide if the pilot is successful. (more…)

Ms. Mauro, now 32, still remembers the moment in 2002 when, sitting in her cube at a New York City communications agency, she tapped out an email to me at The Wall Street Journal lamenting the “pre mid-life crisis that afflicts a tremendous number of people in the 28-35 age range.” Working 12-hour days to pay the rent on their Manhattan apartment, she and her husband of two years, Marc Hineman, a trading-desk manager, had “all kinds of questions” about how they would afford to buy a house and raise a family, she wrote.

“It wasn’t until Marc and I took a huge leap of faith that things started to fall into place for us. About 10 of my friends had moved to Charlotte, N.C., after college. They said, ‘We’re getting out of New York.’ On a visit there in 2005, we saw a new house in a new subdivision that was under construction. It was priced attractively, and we took the leap and bought it. We made plans to move there with Ava — before my husband even got a job in [tag]Charlotte[/tag]. Talk about having faith! My grandfather said, ‘You guys are nuts. You bought a house and your husband doesn’t even have a job there? What are you doing?’ But we felt we had to step out of our comfort zone a little and say, ‘What if?’

“We knew we might have to have a commuter marriage temporarily, but that was a risk we were both prepared to take. Luckily, my husband got a job in Charlotte the day after we closed on the house. The power of positive thinking has a lot to do with that. Sometimes you just have a vision — you know, ‘This is right and we’re going to find a way to make it work.’ (more…)

While some of the nation’s leading economists are optimistic for an improved housing outlook during the second half of 2007, Wall Street’s capital markets researchers — the money guys — are concerned hundreds of thousands of [tag]home loan borrowers[/tag] could be in default before the summer months arrive. Chris Flanagan, managing director and head of global research for JP Morgan Securities, said approximately 35 percent of all [tag]subprime mortgag[/tag]e borrowers could have a difficult time meeting their loan obligations when their [tag]adjustable-rate mortgage[/tag]s hit their first adjustment period.

The amount of money at stake could be $200 billion, with as many as 500,000 to 1 million consumers in potential jeopardy. Many of the loans were “stated income” or low-documentation loans, which involved a relatively low-interest-rate first mortgage and a simultaneous, or “silent second,” mortgage, which together equaled the entire value of the property. In the mortgage business, this is known as a 100 percent loan-to-value-ratio loan. Frank Nothaft, chief economist for mortgage giant Freddie Mac, said while subprime borrowers typically have a default rate eight to 10 times greater than conforming borrowers, he was more suspicious of the huge share of speculators/investors than owner-occupants. “For an owner-occupant to go into default, you usually have to have a trigger event like unemployment or serious illness in the family,” Nothaft said. (more…)

The meltdown in the [tag]subprime mortgage[/tag] sector continued last week, raising concerns that home buyers with impaired credit will face higher rates and far fewer options in the months ahead. Following the December bankruptcy filing of Ownit Mortgage Solutions, a major subprime lender, a steady stream of mortgage firms have either announced cutbacks in subprime production, quarterly losses, or sharply-elevated delinquency rates. Some major banks, such as Washington Mutual, have announced staff reductions in subprime and moved to tighten underwriting rules.

Subprime mortgage originations now account for 20 percent of all new loans, up from a tiny sliver a decade ago. Roughly 45 percent of all subprime borrowers use their loans to buy a home, according to Michael Fratantoni, an economist with the Mortgage Bankers Association, and 25 percent of those purchasers are buying their first home. Any major flight of bond investors from the subprime mortgage securities market, in other words, would have negative repercussions not only lenders and borrowers, but on realty agents and builders as well. The tightening of standards already underway is reducing the availability of “piggyback” mortgages-combined first lien and second lien loan programs that cut downpayment requirements to 5 percent or zero with no private mortgage insurance. The cutbacks in investor appetite are also reducing opportunities for home buyers with spotty credit histories to use limited-documentation and stated-income mortgage financing, sometimes called “liar loans” in the industry. Mortgage wholesalers also report sharply-reduced investor appetites for loans that “layer” risk-combining, for example, low FICO scores with high debt-to-income ratios. (more…)

Many people who [tag]flip houses[/tag] haven’t had to do any significant work on their properties at all. In a [tag]rising real estate market[/tag], just holding property for a few months is sometimes enough to make a nice profit, especially with historically low interest rates and relatively easy credit. As interest rates rise and real estate prices stagnate, however, it’ll be a lot more challenging for people flipping houses to make money.

The goal of flipping houses is no different from what investors in stocks or mutual funds are trying to accomplish. In order to make a profit, house flippers buy low and sell high, seeking out real estate at depressed prices with the intention of reselling it at higher prices later on. There are all sorts of methods that [tag]house flippers[/tag] use to try to find good prospects. Some focus on properties on which banks have foreclosed, with the hope that a financial institution will be more interested in a quick sale than in getting top dollar for the property. Others look for particular areas that have been out of favor in the past but have good potential for gentrification and urban renewal, which are often accompanied by rising real estate prices. You can even find some people who look through obituary pages to find grieving families needing to sell the home of a loved one. (more…)

[tag]Asheville[/tag]’s number one attraction, the [tag]Biltmore Estate[/tag] is astonishingly opulent: 175,000 square feet, 250 rooms, sited among 8,000 acres of forest and meticulously manicured lawns with 75 acres of beautiful gardens. Here, in a gorgeous spot, Vanderbilt created his dream replica of a great European working estate … super-sized.

Today its best-known side operation is its highly regarded winery, which, it surprises most people to learn, is America’s most visited winery. Adjacent Biltmore Village is now home to boutique shops and fine restaurants. Visitors to Biltmore marvel at its sheer size – the footprint of the mansion covers four acres. What lies inside is equally amazing: an incredibly massive foyer, priceless art and antiques, 65 fireplaces, a huge indoor pool, a bowling alley and an immense two-story, wood-paneled library that would be the envy of many cities. (more…)

If you enjoy paying [tag]capital gain tax[/tag]es when selling an investment or business property, you probably won’t want to learn how to pyramid your real estate wealth by legally avoiding taxes on profitable sales. However, if you prefer to build realty wealth without paying taxes, as millions of other investors and major corporations do, read on. Or you might enjoy selling your rental property at a profit, perhaps an apartment or commercial building, and using those funds to acquire your [tag]ultimate dream home[/tag] without paying capital gains tax. Read on.

Ever since 1921, Internal Revenue Code 1031 has encouraged real estate investors to trade one (or more) “like kind” investment or business property for another property (or more) of equal or greater cost and equity without paying profit tax. Uncle Sam views a tax-deferred exchange as one continuous investment so no tax is due. However, “like kind” property means all properties in the trade must be held for investment or use in a trade or business. “Like kind” does not mean “same kind” of property. To illustrate, you can trade your vacant land for a rental house. Or you can trade your apartment building for a shopping center, or a warehouse for an office building. However, your personal residence is not “like kind” so it is not eligible. Over the years, IRC 1031 has evolved to make tax-deferred realty exchanges easier than ever before. After 1984, when so-called Starker exchanges became legal in IRC 1034(a)(3), direct property trades were no longer necessary. (more…)

Efforts by major banks and Wall Street firms to unload bad [tag]U.S. housing loans[/tag] are speeding up a shakeout in the [tag]subprime mortgage industry[/tag]. As more Americans fall behind on [tag]mortgage payments[/tag], Merrill Lynch & Co., J.P. Morgan Chase & Co., HSBC Holdings PLC and others are trying to force mortgage originators to buy back the same [tag]high-risk, high-return loan[/tag]s that the big banks eagerly bought in 2005 and 2006.

As more subprime lenders face losses or bankruptcy, big banks also face another problem: Many lent money to small firms like ResMae so that those firms could make more mortgage loans to borrowers. It isn’t clear how much of these loans will be paid back to the banks. Wall Street firms also are increasing their own internal generation of subprime loans by acquiring smaller mortgage loan originators or processing companies. In 2005 and 2006, banks such as HSBC and brokerage firms like Merrill Lynch went on a buying spree, snapping up subprime loans from typically small mortgage banks that had lent money to homebuyers. At the same time, many lenders were loosening their credit standards and making riskier loans. HSBC kept many of the loans, while Wall Street firms chopped the loans into pools sold to investors as mortgage-backed securities. (more…)

Based on results from its recent mortgage study, the [tag]Center for Responsible Lending[/tag] (CRL) predicts that one out of five [tag]subprime loan[/tag]s issued during 2005 and 2006 will fail, resulting in [tag]foreclosure[/tag] for millions of American homeowners. CRL’s study, the first nationwide review of [tag]subprime mortgage[/tag]s issued between 1998 and third quarter 2006, revealed that the subprime market has experienced high foreclosure rates despite low interest rates and a favorable economic environment during recent years.

So who will lose when the expected tsunami of foreclosures washes through the system? Dotzour said it will not be the mortgage companies, who originate the loans, collect a fee and then sell the loans, and he doubts it will be mortgage bond holders, who have ways of hedging both interest rate risk and credit risk. Instead, hedge funds, pension funds and endowment associations that have been chasing yield by accepting more risk, or large commercial banks offering complex derivatives to allow traders to hedge their risk in mortgage bonds are likely to feel the pinch. “It’s safe to say that nobody knows exactly where the ultimate risk really lies in the financial markets,” Dotzour said. “Look at how long it is taking Fannie Mae to get their accounting straightened out to the point that even a financial genius could understand it. There is no way a layperson will ever be able to understand the risk they take when they buy stocks in large financial institutions.” (more…)

A rise in defaults is prompting some lenders to clamp down on the use of “[tag]piggyback[/tag]” mortgages, a risky type of loan that helped prolong the housing boom by allowing borrowers to finance up to 100% of the purchase price. Lenders are likely at least to cut back on piggybacks this year because of the difficulty in selling them to investors, said Thomas Lawler, a housing economist in Vienna, Va., who refers to such loans as “[tag]oinkers[/tag]” in light of their poor recent performance.

[tag]Piggyback second mortgages[/tag] typically cover as much as the final 20% of the home’s cost, supplementing a first mortgage that covers 80%. Investors have grown increasingly wary of buying such loans from lenders amid a surge in defaults by recent subprime borrowers. The holder of the second-lien mortgage can hope to collect proceeds from the sale of collateral only if the holder of the first mortgage is fully repaid. In many foreclosure cases, second mortgages must be entirely or almost completely written off.

The [tag]subprime mortgage[/tag] market has mushroomed in recent years as lenders found that investors both in the U.S. and abroad were eager to buy securities backed by such loans. Mr. Lawler, the economist, estimates that 17% to 18% of mortgage-financed home purchases in the U.S. last year involved subprime loans. About half of the subprime home-purchase loans included in mortgage securities last year were piggybacks, according to a recent report by Credit Suisse Group in New York. (more…)

Thanks to relaxed lending standards, in recent years borrowers with bad credit – such as a [tag]bankruptcy[/tag] or a [tag]delinquent loan[/tag] on their record – found it relatively easy to get home mortgages. Such “subprime” borrowers generally have to fork over higher interest payments to compensate the lender for the added risk of default they represent. So lots of subprime borrowers kept their house payments lower by taking out exotic mortgages such as [tag]adjustable-rate[/tag], [tag]interest-only[/tag] or [tag]negative-amortization mortgage[/tag]s.

During the housing boom, borrowers and lenders took comfort in the fact that home prices rose and rose, with no signs of slowing. Even if a borrower had an interest-only loan, the rising value of the home would build equity for the owner. But with home prices falling in many parts of the country, that safety net has been eliminated. And with interest rates rising, borrowers with adjustable-rate mortgages are facing higher monthly payments and, increasingly, foreclosure. (more…)

As [tag]interest rate[/tag]s rise, more homeowners are falling into [tag]foreclosure[/tag]. That is what is prompting the wave of bargain-hunting investors now descending on courthouse auctions across the country. “It’s just crazy. We have 100 houses [at auction] each week, when we used to have 10 or so,” says Elaine Began, a deed clerk in Macomb County, Mich. Three years ago, the Montgomery County (Ohio) Sheriff’s Office was “lucky to get 50 people to an auction,” says Laura Wright, a foreclosure clerk there. Today, 120 often show up. Some may be sorry they did. Novices face a host of risks.

The process usually begins when mortgagees fall three months behind on payments. The lender sends a default notice to the homeowner and to the county. If the homeowner can’t pay up, a foreclosure date is set. County officials handle the auction and use the proceeds to pay off the mortgage and any other debts secured by the house. Leftover money goes to the foreclosed homeowner; leftover debt, in some cases, is the new owner’s responsibility. The mortgage lenders typically bid up to the remaining principal amount plus any foreclosure fees. Their goal is to recoup what they are owed, either from investors bidding more or by buying the home and reselling it. [tag]Foreclosed homeowner[/tag]s sometimes join the bidding and win the auction, even though they don’t have the money, effectively delaying their eviction until another auction is held. Investors can get in the game before or after auctions, too. They can try to buy directly from homeowners beforehand or from lenders who win the auction. (more…)

For some reason, I have received a number of letters recently that criticized some articles I had written back in 1998-99 on [tag]lender junk fees[/tag]. These articles are on my Web site, and since nothing about junk fees has changed since they were written, I have never had occasion to revise them. In response to the criticism, however, I took a fresh look at the articles and realized that something had changed since they were written: me. My take on junk fees is a little different now than it was eight years ago, I hope because I’m smarter but perhaps only because I’m older.

[tag]Mortgage junk fees[/tag] are all upfront lender charges other than points. They include all lender charges expressed in dollars, such as “processing fee,” “lender attorney fee,” “endorsement fee” — the list goes on and on. Junk fees also include one charge expressed as a percent of the loan, called “origination fee.” I don’t like the term “junk fees” and wish it had never been coined. The reason is that borrowers tend to interpret it to mean that the lender is performing no real service and/or that a particular fee is too large. This mindset causes borrowers to look for information about how large a particular fee ought to be, and to bargain with the lender to get one or more fees reduced. (more…)

[tag]Mortgage rates[/tag] have enjoyed a modest rally, the [tag]10-year T-note[/tag]’s decline from 4.88 percent to 4.77 percent leading mortgages from 6.375 percent to 6.25 percent. Do not expect more improvement, not with an economy as strong as this, and zero chance of a rate cut from the Fed. On the other hand, don’t expect the blow-up in rates that would normally follow dashed bond-market hopes for a recession, long yields soaring above the Fed’s 5.25 percent cost of money.

This unnaturally “[tag]inverted yield curve[/tag]” is just one of several effects of the recycling of the American trade deficit, now in the previously inconceivable range of $750 billion per year, some 6 percent of GDP. For exporters to us to continue to export, they must keep the dollar strong enough to buy their junk (and oil), and the only way to do that is to re-invest their dollar winnings here. There has never been anything like this before, neither magnitude nor duration, but the effects are coming clear: there is a constant bid in every financial market ([tag]commercial real estate[/tag], too), which has caused prices to rise, limited downside damage, suppressed volatility in general, compressed spreads for risk in time and credit, held [tag]long-term interest rates[/tag] artificially low, and stimulated the economy. (more…)

Probably the biggest advantage that comes from having a good credit score is being able to get lower interest rates on loans. The reason you have a good credit score is because you know how to [tag]manage your credit[/tag] wisely. You pay back your loans and make payments on a timely basis. Lenders know by your credit score that you’re less of a credit risk–you’re less likely to [tag]default on your loan[/tag], so they’re more willing to give you a cheaper interest rate. And the lower your interest rate, the lower your monthly payment. In essence, having good credit saves you money.

As a result of your [tag]good credit score[/tag], the more freedom you have to shop around–for loans and for lenders. You can shop around for more types of loans since you qualify for more. You don’t have to go with the first one you find. It’s better to shop around for the loan that best suits your financial goals and your individual situation. For example, let’s say you just accepted a new permanent position and were moving with your family. You want your kids to grow up there and didn’t plan on moving. You might go with a [tag]30-year fixed-rate mortgage[/tag]. But, in contrast, let’s say you wanted to invest in a rental property and needed some flexibility in payment. You might then go with an option ARM that allows you to make different types of payments at different times. (more…)

Generally speaking, an [tag]adjustable- rate mortgage[/tag] will provide a lower initial rate. However, it will also carry a degree of uncertainty as the rate, and monthly payment, can adjust over time. The benefit with the [tag]fixed rate[/tag] is the stability it provides with set monthly payments. s you evaluate the pros and cons for your particular situation, there are a few issues worth considering before making a decision.

There’s not a one-size- fits-all answer, and there are other questions to answer along the way. Do you expect your finances to change over the next few years? Are you planning to live in the home for a long period of time? Are you comfortable with the idea of a changing mortgage payment amount? Do you prefer to be free of mortgage debt when your children are in college or as you enter retirement? Generally, [tag]adjustable-rate mortgage[/tag]s, or [tag]ARM[/tag]s, make more sense if you relocate frequently or plan to stay in the home a short time. ARMs are initially cheaper than [tag]fixed-rate loan[/tag]s, but you run the real risk that interest rates could rise sharply at some point, as we have experienced in the recent past, and that rise will drive up your [tag]monthly payment[/tag]s. The lower initial rates mean you could qualify for a more expensive home, but remember if the payment rises, you need to be prepared. (more…)

A [tag]reverse mortgage[/tag] is a loan that enables homeowners 62 or older to borrow against the equity in their home without having to sell the home, give up title or take on new [tag]monthly mortgage payments[/tag]. Loan proceeds can be used for any purpose. They can be taken out as a lump sum, fixed monthly payments, a line of credit or a combination.

When you take out a reverse mortgage, your debt is increasing, while your equity is decreasing. If you plan to leave your home to your children when you die, this may be an issue.

Fees and costs associated with your reverse mortgage can be financed.

A rising number of private lenders are offering their own versions of nonfederally insured reverse mortgages, some with lower fees than federally insured programs, Hicks says. (more…)

[tag]Chimney Rock Park[/tag] owner Dr. Lucius Morse says his family’s decision to sell the 996-acre park to the state of North Carolina for $24 million is about posterity. Morse recalled attending one of the park’s Easter sunrise services where a minister said: “The Morses don’t own the park, God does. They are just stewards of the land.” “And of course I assured him we felt the same way,” said Morse, whose family has owned the mountain landmark, a land of imposing rock cliffs and cascading waterfalls, for more than a century.

Residents of Hickory Nut Gorge in Rutherford, Henderson and other counties have spent months writing letters to newspapers and state leaders calling for the state to buy the park. That came after the family in July hired [tag]Sotheby’s International Real Estate[/tag] to market the land for $55 million, believed the highest asking price for a piece of land in state history. The state will buy the land with $15 million the General Assembly appropriated last year plus grants from the state’s Park and Recreation, Natural Heritage and Clean Water Management trust funds. A private donor contributed $2.35 million for the purchase. Although officially anonymous, most of that money came through the [tag]Conservation Trust for North Carolina[/tag] from the Stanback family of Salisbury, a state official said. Fred and Alice Stanback were among dozens of residents who attended Monday’s ceremony. (more…)

It’s no secret that business has been more difficult lately for U.S. [tag]home builders[/tag] — demand for new homes saw its biggest drop since 1990 in 2006, according to the Commerce Department. Faced with [tag]rising home inventories[/tag], home-building companies are offering incentives and, in some cases, slashing prices to attract buyers. “It is the best time to buy a new house,” says Harley E. Rouda Jr., chief executive officer and managing partner of real-estate firm Real Living Inc. “Builders are being very aggressive in terms of selling down their inventories.”

he more homes a builder has on the books, the more likely he will be ready to deal. “The first thing home buyers should look for is inventory,” suggests Ohio State University finance professor Anthony B. Sanders. “Spec” homes — properties that builders build without first securing a buyer — present valuable opportunities for home buyers, he says. “You want to look for builders who have spec homes completed, because on those homes, builders will be more flexible because it is sitting inventory that they want to sell,” says Allan Domb, president of Allan Domb Real Estate in Philadelphia. Property on which a home has been built is more costly for a builder to carry than land that is vacant, he explains. (more…)

Gov. Mike Easley announced a deal this week to purchase the park from the Morse family, which purchased Chimney Rock in 1902 and added to the park later. The last cog in this week’s deal was a generous contribution from Fred and Alice Stanback, a couple who have used their headache powder fortune to preserve vast stretches of North Carolina wilderness.

When [tag]Chimney Rock Park[/tag] becomes state property, it will join the adjacent, and soon-to-open, [tag]Hickory Nut Gorge State Park in[/tag] providing North Carolinians with spectacularly preserved areas of natural beauty. The [tag]Stanbacks[/tag] helped buy that land, too.There are many people and institutions to thank for the money that saved Chimney Rock from development. Not the least is the Morse family, which certainly got better-price offers from developers. They had listed the property for $55 million. The state was locked into a $20 million offer, and the final price was $24 million.

Generations of North Carolinians will visit Chimney Rock and the Hickory Nut Gorge parks and enjoy their astounding beauty. The land will be free of private development. There’ll be neither luxurious mansions along the ridges nor Disney-like parks in the valleys.

For that, North Carolinians can thank the wisdom of those who created the trust funds, the Morses and the Stanbacks.

(more…)

At the University of Maryland a few years ago, an architecture student undertook an unusual master’s thesis project: the functional and aesthetic redesign of a strip shopping area in suburban Maryland. The goal was to transform a low-density, auto-dominated, formless agglomeration of buildings, roads and parking lots into a more attractive, denser, pedestrian-friendly spot with housing and work space, as well as shopping. His thesis was timely and relevant because the American suburbs are littered with thousands of generic, aging shopping complexes, large and small, that cry for transformation.

Built decades ago, some are physically run-down, suffering from wear and tear and lack of upkeep. Many are economically unviable, having been configured in ways that no longer meet today’s retail needs and design standards. Others sit in locations that, because of steady population growth or infrastructure improvements over time, have increased greatly in value. These complexes often have the capacity for substantial alteration or expansion incorporating newer, more intense, more diverse uses. The master’s thesis exploration, although hypothetical, was not purely theoretical, as evidenced by recent Washington Post news reports of two older, very different kinds of shopping complexes slated to be transformed — although the headlines spoke of “overhaul” and “face-lift” rather than transformation. (more…)

“Let every house be placed … in the middle of its plat,” said one of America’s best-known [tag]city planner[/tag]s, “so there may be ground on each side for gardens or orchards or fields, that it may be a green country town, which will never be burnt and always wholesome.”It’s a tribute to the framer of this dictum that modern city planners still fervently adhere to it. The trouble is, it was made by William Penn, the founder of Pennsylvania, around the time he laid out Philadelphia in 1682. A lot has changed since then, but you wouldn’t know it by looking at our planning codes.

Essentially, [tag]setbacks[/tag] are reserved areas on each edge of your property — like margins on a page — that you’re not allowed to build upon. The idea is to help ensure William Penn’s ideal of houses spaced well apart, with usable land on all sides. Given the long historic trend toward higher land prices, smaller lots and bulkier houses, however, many suburban setback requirements no longer make sense. Today’s typical 5-foot side-yard setbacks, for example, serve mainly to mandate sunless, useless slivers of land between houses. Yet rather than doing away with these vestigial separations altogether, moribund planning codes stubbornly cling to them, stymieing the growth of more intelligent arrangements. (more…)

People are saving at the lowest level since the Great Depression, and that could be a problem for the millions of baby boomers getting ready to retire. In fact, the Commerce Department reported Thursday that the nation’s [tag]personal savings rate[/tag] for all of 2006 was a negative 1 percent, the worst showing in 73 years. The negative rate means people are spending all of the money they have left after paying taxes _ and then some. They are dipping into savings or increasing their borrowing to [tag]finance current spending[/tag].

The young and the poor have the most trouble saving. Some 42 percent of people 18 to 49 said they are likely to spend more than they can afford. Among those with household incomes below $30,000, some 45 percent said the same. The 1 percent negative savings rate in 2006 followed a 0.4 percent negative rate in 2005. There have been only four years in history that the savings rate has fallen into negative territory. The other two were 1932 and 1933 during the Great Depression. During the Depression, when as many as one in four people were out of work, households were exhausting savings in order to pay the rent and buy food. (more…)

I’m [tag]behind on my mortgage payments[/tag] and probably will be [tag]foreclosed[/tag]. People have told me to (1) do a “short sale” of the property, (2) give it back to the lender with a [tag]deed in lieu of foreclosure[/tag], or (3) proceed to foreclosure and then [tag]file bankruptcy[/tag]. Please explain the pros and cons of each. Do I have to have a short sale before I can do a deed in lieu of foreclosure? What if I sell the property at market value, but that’s not enough to pay all the debts?

Lenders can be very difficult about agreeing to a short sale. You need a listing agent experienced with short sales who can deal with your lender and who will insist you receive absolutely nothing from the sale. Most mortgage lenders will not accept a deed in lieu of foreclosure. The reason is the lender then takes title “subject to” any liens or encumbrances you might have incurred during ownership. However, if you can prove to the lender there are no junior mortgages or other liens affecting title, such as unpaid property taxes, your lender might accept this alternative, which is cheaper for the lender than foreclosure. If you let the property go to foreclosure sale, why file bankruptcy? That makes no sense unless you have other extensive debts such as credit cards you just can’t afford to pay. Should you file bankruptcy while the foreclosure is pending, that delays foreclosure but doesn’t prevent it. (more…)