AOL Real Estate - Blog http://realestate.aol.com/blog AOL Real Estate - Blog http://realestate.aol.com/blog/media/feedlogo.gif AOL Real Estate - Blog http://realestate.aol.com/blog en-us Copyright 2013 Weblogs, Inc. The contents of this feed are available for non-commercial use only. Blogsmith http://www.blogsmith.com/Why Real Estate Investors Have the Edge in Housing Markethttp://realestate.aol.com/blog/on/why-real-estate-investors-dominate-housing-market/http://realestate.aol.com/blog/on/why-real-estate-investors-dominate-housing-market/http://realestate.aol.com/blog/on/why-real-estate-investors-dominate-housing-market/#commentsFiled under: , ,




Prospective homebuyers are entering some markets today to find it rife with competition and the pickings slim. While many put off home purchases during the financial crisis, Wall Street investors dove right in and snapped up all the good buys while they were cheap. This was especially prevalent in areas where housing prices bottomed out during the recession. And now, with interest rates historically low and the economic recovery under way, average consumers want in -- but they're running into fierce competition over what's left to choose from.

Matthew Ong of Nerd Wallet on HuffPost LiveA recent discussion on HuffPost Live -- shown in the video above -- looked at why real estate investors make much more attractive buyers than others in the housing market. Said Matthew Ong, a retail analyst at Nerd Wallet: They bid in cash, in full and higher than the asking price. Investors also have the funds to give homes much-needed repairs. But instead of selling those properties they rent them out, altering the social fabric of the neighborhoods as people begin to move in and out more frequently.

"The problem here is that investors buy when something is cheap, whereas consumers buy when they're ready," Ong said.

But waiting for buyers to be ready is not how the market works, so average consumers might need to be prepared for a long, hard search.

See more news about homebuying:
More Young Couples Say 'I Do' to Buying a Home Before Marriage
Investors Betting on Housing Recovery Big Time
Where Castles Offer Big Bang for Your Buck

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]]>consumersfinancial crisishome buyinghousing marketinvestorsreal estate investorsrecessionwall streetwhy real estate investors dominate housing marketAol Real Estate Staff2013-05-22T14:16:00+00:008 Key Facts About Your Mortgage APRhttp://realestate.aol.com/blog/2013/05/22/mortgage-apr-facts/http://realestate.aol.com/blog/2013/05/22/mortgage-apr-facts/http://realestate.aol.com/blog/2013/05/22/mortgage-apr-facts/#commentsFiled under: , ,

mortgage document, pen and house keys

By Scott Sheldon

Securing a mortgage today requires careful consideration of all the figures associated with the transaction. The biggest figures that most homebuyers pay attention to include loan amount, interest rate, closing costs and the one most benign to consumers, the annual percentage rate (APR for short), which is a disclosure item required in loan advertisements and loan disclosures.

Set forth by TILA (Truth In Lending Act) and overseen by the Fed, APR is touted as the most accurate barometer to compare one mortgage offer to another. In comparing mortgages, there is often inaccurate distinctions made with regard to disclosures between APR and interest rate, and what consumers are actually borrowing that creates confusion around the numbers. Here are some terms you need to understand to cut through the confusion.

Annual Percentage Rate, or APR: A function of blending the closing costs associated with the loan transaction and re-amortizing that figure over the term of the loan.

Interest Rate: The actual interest rate tied to the amount of money being borrowed. Also called a "note rate," it is what determines the amount of interest you'll pay over the life of the loan on an amortization schedule.

The Facts About Mortgage Annual Percentage Rate

o. The annual percentage rate does not determine the monthly mortgage payment. The note rate is what determines the monthly mortgage payment.

o. Lenders must disclose the annual percentage rate on their loan disclosures after you submit a mortgage application.

o. The APR is usually within a 0.125 percent range above the note rate. This is positive because it indicates your closing costs are very small in relationship to the amount being borrowed and the interest rate (note rate) you are receiving.

o. If the APR is substantially over the 0.125 range above the note rate, this is an indicator of higher fees (closing costs) associated with the amount borrowed.

o. The APR is higher than the note rate because the APR takes into consideration a "blending" of the interest rate and closing costs over the life of the loan.

o. APR is not paid over the term of the loan -- for example, 360 months representing a 30-year fixed rate mortgage. The note rate is the interest rate paid over the term of the loan.

o. The APR is a measuring tool used upfront to compare mortgage offers only, usually during the initial application process in comparing different loans.

o. APR represents the total cost picture in securing a mortgage, not the total interest paid over the life of the loan.

While APR is the standard used to compare mortgages, it is not the only way to compare mortgages. Rather than trying to figure out the intricacies of APR, consumers could also be served by comparing the following items to determine what mortgage choice is ideal.

These include:
o. Loan term.
o. Interest rate.
o. Closing costs.
o. One loan term versus another.
o. Closing costs recapture (determined by taking amount of closing costs divided by payment savings).

One last takeaway: The mortgage with the financing terms most consistent with your long-term goals and objectives is the ideal direction to take.

See more on Credit.com:
The First Thing to Do Before Buying a Home
Why You Shouldn't Obsess Over Mortgage Rates
3 Things That Can Stop a Mortgage in Its Tracks

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]]>annual percentage rateAPRhome+buyinghomebuyersinterest ratesmortgagemortgage aprmortgage tipsmortgagesCredit.com2013-05-22T13:00:00+00:00China's Real Estate Market: A Bubble About To Burst?http://realestate.aol.com/blog/on/china-real-estate-bubble/http://realestate.aol.com/blog/on/china-real-estate-bubble/http://realestate.aol.com/blog/on/china-real-estate-bubble/#commentsFiled under: , ,




China's housing bubble may be ready to pop if the government doesn't take measures to prevent it, some economists are saying. The impact on China's economy could be devastating and permanent, much like Japan's crash of the 1980s, analysts speaking to CNNMoney warn. Home prices have spiked as much as 8 percent or more in some parts of the country over the past year. The National Bureau of Statistics found that of 70 major Chinese cities, 67 saw a rise in prices in April.

Chinese skyscrapers shown on 60 MinutesAs seen in the Newsy video above, CNNMoney reports that a 2,000-square-foot, three-bedroom home fetches as much as $2.27 million in Shanghai, as property values have soared there and in other tier-one cities such as Beijing and Guangzhou in the past decade. The trouble is that China measures GDP by what is built, unlike the U.S., which measures growth by what's bought and sold. This has put pressure on the state to build as much as it can and has resulted in what have been dubbed "ghost cities" -- multiple-block stretches of vacant skyscrapers. That's a clear warning sign for a country that builds an average of 12 to 24 new cities a year, a financial analyst in Hong Kong, Gillem Tulloch, told "60 Minutes."

One idea is for the government to introduce an annual property tax based on a home's market value. "That would reduce speculation, discourage owners from holding empty flats and provide a fresh source of funding for cash-strapped local governments," The Economist suggested (via Business Insider).

The Chinese government has stated that it will implement a plan to curb the spike in prices in Shanghai and Guangzhou, but hasn't said when.

See more on Chinese Real Estate:
China's Empty Cities: These Satellite Images Will Shock You
Guangzhou, China, Sinkhole Swallows Buildings (VIDEO)
Tricycle House in China Gives New Meaning to Mobile Home

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]]>chinaChina real estatechinese economychinese real estate bubblehousing bubbleAOL Real Estate Editors2013-05-22T12:15:00+00:00Vacation Home Sales Sizzle, Rentals Booking Fasthttp://realestate.aol.com/blog/2013/05/21/vacation-home-sales-rentals/http://realestate.aol.com/blog/2013/05/21/vacation-home-sales-rentals/http://realestate.aol.com/blog/2013/05/21/vacation-home-sales-rentals/#commentsFiled under: , ,

By Diana Olick

In the kitschy community of St. Michaels on the Maryland shore, businesses are gearing up for the official start of the season, Memorial Day weekend. Trucks carrying dozens of bicycles are unloading into waterside racks and shopkeepers are moving their bright-colored wares out onto the sidewalks. For real estate rental agents, however, the hard work is largely done. The biggest houses already are booked.

"Those houses do tend to book up in January," said Deborah Lipscomb, owner of Eastern Shore Vacation Rentals. "Because of the Jersey Shore and the things going on there, we are seeing more of a demand for this area."

The recession hit homebuying in this area, which actually increased competition in the rental market, but that may be about to change. Low mortgage rates, returning consumer and investor confidence, and the new migration from New Jersey are all combining to turn this Maryland market around. "We're getting the calls again from people looking to really buy -- buy into the market and start renting again," said Lipscomb.

The impact of Hurricane Sandy is less apparent farther south on Hilton Head Island in South Carolina. "It's a great time to buy, it's a bad time to sell, is what I tell people," said James Wedgeworth, who has been selling real estate on the island for over a decade. "There is a light at the end of the tunnel. "The rental market on Hilton Head, which largely caters to the golfing set, has remained strong throughout the recession, likely because so few people wanted to buy. Confidence is slowly returning here, but prices are not.

"It hasn't really started going up, but at least it's not going down. We had seven straight years of prices going down. That's no fun," added Wedgeworth.

Vacation home sales rose 10 percent nationally in 2012, according to the National Association of Realtors, but as with all things real estate, location is key. Prices are just stabilizing in South Carolina, but in the tiny towns of eastern Long Island, N.Y., better known as the Hamptons, home prices are roaring back and rentals are fully booked for the season.

"We've seen bidding wars in the four-to-five-million-dollar range as well as in the overall market," said Laura Nigro, a real estate broker in Bridgehampton. "It's so much better than when the 2008, 2009 economy shrank and people were very much afraid to invest in anything." Nigro pointed to the potential of rising mortgage rates as the key driver. She said the Hamptons are not seeing too many migrants from the Jersey Shore. The newest clients are coming from much farther away: China.

"In the Hamptons, there is a new influx of Chinese buyers. In the past, they haven't been prevalent in this Hampton marketplace, but this season, for whatever reason there is, they are out looking for properties," she said. Neither the Chinese nor the locals seem particularly concerned about more storms coming to the coast. Potential buyers are, however, looking more closely at FEMA flood requirements and coastal erosion zones, according to agents, but they are still ready to buy.

On Hilton Head, James Wedgeworth said clients are asking more questions about storms, but he has the perfect answer: "If you look at a NOAA map of all named hurricanes since 1950, the safest place, believe it or not, is Jacksonville, Fla., to Hilton Head. For whatever reason, they always hit up north."

See more on CNBC:
Fannie Mae in the Black: Now What?
America On the Move
Apartment Growth to Boom

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How to Decide If You Should Purchase a Vacation Home


 

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]]>buying a homebuying a vacation homehome+buyingvacation homesvacation rentalsCNBC2013-05-21T15:00:00+00:00Are No-Cost Mortgages Always the Best Deal?http://realestate.aol.com/blog/2013/05/17/no-cost-mortgages/http://realestate.aol.com/blog/2013/05/17/no-cost-mortgages/http://realestate.aol.com/blog/2013/05/17/no-cost-mortgages/#commentsFiled under: , ,

fever chart with Monopoly game housesBy Scott Sheldon

A program made popular in the height of the subprime lending environment was the no-cost mortgage. No-cost mortgages have gotten quite a bit of exposure lately, as consumers seek to better understand loan terms, interest rates and how to qualify for mortgages in an ever-tightening credit market. And then there's the low-cost mortgage. No-cost mortgages, low-cost mortgages -- two distinct kinds -- here's how they differ.

Some Lending Lingo

1. Annual Percentage Rate is a function of blending the closing costs with the loan amount and re-amortizing that figure over the term of the loan. On traditional loan financing, the APR is usually within .125% of the actual note rate tied to the amount borrowed.

What to know: APR is a comparative tool enforced by the Truth In Lending Act to quickly assess cost differences between loan choices. The APR has no bearing on your principal and interest payment amount or the note rate. APR is a barometer of loan cost solely. The interest rate, rather than note rate, determines the monthly mortgage payment.

2. No-Cost Mortgage is truly a "no-cost" loan -- no appraisal fee, no lender fees and no closing costs. These fees are assessed by virtue of taking out the loan. The mortgage lender provides a credit at the close of escrow equal to the amount of the closing costs, thereby creating a "no fees" loan. APR is equal to the interest rate, but disclosure will have a higher APR just as a traditional mortgage would, as lenders are required to disclose APR whether there is a lender credit or not.

What to Know: No-cost mortgages will contain a higher interest rate and APR, so you're in essence amortizing the closing costs over the life of the loan (i.e. 360 months representing a 30-year fixed rate mortgage). The higher interest rate allows the lender to generate "overage" for the benefit of the consumer taking out the no-cost mortgage.

3. Low-Cost Mortgage is a traditional mortgage all lenders offer that is considered the norm, taking out a loan while paying any applicable fees associated with doing so, excluding discount points, which are usually optional. (In some cases paying discount points may very well make sense, but for our purposes a low-cost mortgage is under the assumption of no discount points.)

What to Know: Low-cost mortgages will contain lower rates than their no-cost mortgage counterparts. Because the lender does not have to inflate the rate for generating overage to pay the borrower's closing costs, the lender can offer the consumer premium pricing when it comes to the interest rate and terms. Not always, but in most cases, the interest rate and APR are lower on low-cost mortgages than on no-cost mortgages.

Which Is Better for You?

The benefits you would gain from either type of loan depends on how long you plan to hold the loan and your financial goals. For example, because the future for many is unknown in terms of how long the loan will be held for and/or how long the property will be held for, a low-cost mortgage is a more appropriate long-term strategy as the realized benefits of the lower-cost mortgage materialize over time -- i.e., lower interest savings over the life of the loan. Conversely, if the property hold time or the loan payoff is going to be dramatically shorter, such as within the next 12 months, a no-cost mortgage is more appropriate despite the higher interest rate.

Read the rest of this story on Credit.com.

See more on Credit.com:
The First Thing to Do Before Buying a Home
Can You Really Get Your Credit Score for Free?
19 Confusing Mortgage Terms Deciphered

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Personal Finance Terms 101: Mortgage

 

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]]>APRlow-cost mortgagesmortgage financemortgage ratesmortgagesno-cost mortgagesCredit.com2013-05-17T13:30:00+00:00Pets in Listing Photos: Cute But Maybe Not Good for a Salehttp://realestate.aol.com/blog/2013/05/17/pets-listing-photos/http://realestate.aol.com/blog/2013/05/17/pets-listing-photos/http://realestate.aol.com/blog/2013/05/17/pets-listing-photos/#commentsFiled under: ,

Property Listing Tips: Should You Put Your Dog in the Listing Photograph?


Humans are known to discard all pretenses of rational thinking when it comes to pets, but could photos of playful pups in real estate listings really drive purchases?

New York realtor Phyllis Galloway thinks so, and in her 30 years at Sotheby's International Realty she's made a name for herself marketing homes to pet owners. "Pets warm up a listing and give a home character," she told The Wall Street Journal.

But Galloway also recognizes that people who don't like animals or have allergies may be turned off. And although pets draw eyeballs to a listing, it usually ends up becoming all about the sweet-faced quadruped rather than the property on sale.

"Eight out of 10 people -- if you show them a photo with a dog in it, they wouldn't remember the apartment, they would remember the dog," Nicole Oge, senior vice president of marketing at Town Residential, told the Journal.

See more on real estate listing practices:
Photoshopped Listings Sometimes Make for Not-So-Real Estate
Home Listings: 10 Terms That Can Kill a Sale
Real Estate Broker Warms Up Cold Listings With Hot Models

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]]>petspets in listing photosPhyllis GallowayReal Estate listingsAOL Real Estate Editors2013-05-17T11:00:00+00:0010 Mortgage Misconceptionshttp://realestate.aol.com/blog/2013/05/13/mortgage-misconceptions/http://realestate.aol.com/blog/2013/05/13/mortgage-misconceptions/http://realestate.aol.com/blog/2013/05/13/mortgage-misconceptions/#commentsFiled under: , ,

mortgage agreement

By Alison Paoli

Mortgages are tricky and often hard to understand. Because most people only purchase a home every five to seven years, prospective homebuyers understandably don't spend a lot of time in the interim educating themselves about mortgages and the mortgage process.

With the real estate market picking up and mortgage rates prime for refinancing, Zillow has compiled a list of common mortgage misconceptions based off the results of the just released 2013 Mortgage IQ Survey.

Misconception No. 1: Your interest rate reflects the true cost of your mortgage. Your annual percentage rate is actually the figure that represents the true cost of your mortgage. It is inclusive of your interest rate, points, mortgage insurance (when applicable) and other fees, including origination and underwriting fees. It does not include the cost of your homeowners insurance policy. The APR is typically higher than your interest rate because it incorporates the rate and the fees. In fact, when shopping for a mortgage, it is best to compare loans based on APR instead of the interest rate because it gives a better sense of the total cost over the life of the loan.

Misconception No. 2: Mortgage rates are only released once per day. Mortgage rates for all types of mortgages can change frequently, sometimes dramatically, throughout the day. Because of the rapid changes in mortgage rates and a lender's ability to control what is offered, it is important to shop around for the best rates. Getting multiple loan quotes is highly recommended.

Misconception No. 3: All lenders are required by law to charge the same fees for appraisals and credit reports. There are no laws that require lenders to charge the same fees for services such as appraisals or credit reports. In fact, in order to make their loan quotes more competitive, some lenders may waive charges for such services. Conversely, some lenders may charge higher fees for these services, so it's important to shop around.

Misconception No. 4: I must get my mortgage through the same lender I was pre-approved with. A pre-approval is a conditional agreement that estimates the size of the home loan a lender would fund for you. It typically involves income verification and a credit check. However, you are under no obligation to proceed with the lender that gave you the pre-approval. Make sure you get at least three loan quotes before proceeding with a mortgage.

Misconception No. 5: You will almost always get the best mortgage interest rates at the bank where you have a checking account. While some banks do give their customers discounts, it's unlikely your bank will offer the best interest rate available simply because you bank there. To get a competitive mortgage rate and terms, get quotes from multiple lenders either in person or online - including your bank - and pick the one that works best for you.

Misconception No. 6: When taking out a mortgage with your spouse, lenders will look at each of your credit reports equally when determining the interest rate you qualify for. When applying jointly for a mortgage, lenders will pull your credit scores from each of the three major credit reporting agencies: Experian, Equifax and TransUnion. They'll then take the middle score of each set and use the lower of the two to help determine your mortgage interest rate. This means that the least creditworthy borrower will have the greatest effect on your monthly payment. It does not matter who the primary or secondary borrowers are.

Misconception No. 7: You cannot get a home loan with less than a 5 percent down payment. It is a common misconception that you need to put down 10 percent, 15 percent or even 20 percent on a home, especially in light of the recent housing crash. But with as little as 3.5 percent down, you can often obtain a mortgage through the Federal Housing Administration (FHA). FHA loans have become a popular loan option for those who may not have a large down payment or have blemishes in their credit history. FHA loans are available to everyone, not just first-time home buyers. (Find out more about the advantages and disadvantages of an FHA loan here.)

There are also alternative loan programs through other agencies, including the Department of Veterans Affairs (VA) and the United States Department of Agriculture (USDA). These loans also require little-to-no money down.

Misconception No. 8: If you go through a short sale or foreclosure, you must wait 7 years before getting another home loan. In most cases, to buy a home after a short sale, you'll typically only need to wait 2-4 years depending on your down payment and the loan type you select. The waiting period after a foreclosure is longer: Typically you'll need to wait 3-7 years before getting another home loan. Even if you can afford to get a mortgage right now, you'll need to have a good credit score, which can be difficult to rebuild in just a few years. Unique circumstances can lead to different outcomes, so make sure to check with a lender or two.

Misconception No. 9: If you are underwater on your home loan, you are unable to refinance. It is estimated that millions of homeowners who are underwater and current on their mortgage can refinance using one of two special government programs. The first, the Home Affordable Refinance Program (HARP), is available to homeowners who have a loan backed by Fannie Mae or Freddie Mac. The second program, FHA Streamline Refinance, has recently been modified to help homeowners with loans insured by the Federal Housing Administration (FHA). Both programs help homeowners refinance into lower interest rate loans and may help dramatically lower payments without very much cost to the borrower. Zillow Mortgage Marketplace is the only online mortgage marketplace where you can get loan quotes for HARP and FHA Streamline. As an added bonus, it is the largest mortgage marketplace where you can anonymously get loan quotes, meaning you don't enter any personally identifiable information and therefore cannot get spammed and hounded by lenders who were sold you contact information. See if you may qualify.

Misconception No. 10: You can only refinance your home loan once every 12 months. With conforming loans backed by Fannie Mae or Freddie Mac (the vast majority of loans today), you can refinance as frequently as you'd like so long as you do not take cash out when you refinance and are just refinancing to lower the interest rate and/or term of your mortgage. The rule of thumb is to wait until the difference between your current interest rate and the available interest rate would save you enough money each month to cover the costs of refinancing in two years. The amount of time that you plan on being in the home should be considered, as well. In general, refinancing will be more financially beneficial the longer you are in the home. Use the refinance calculator to determine how long it will take to break even on the costs of refinancing.

If any of the misconceptions had your name written all over it, visit the Zillow Mortgage Marketplace Help Center, where you can brush up on everything mortgage before you refinance or purchase your next home. You can also take the Mortgage IQ Quiz for yourself, or send it to a friend who is in the market; they'll thank you.

See more on Zillow:
HARP Extended Through 2015
What to Expect When Refinancing
Mortgage Financing: Loan Products 101

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

 

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]]>annual percentage ratehome buyershome buyinghome loansmortgagemortgage misconceptionsmortgage mistakemortgage mistakesmortgage ratesmortgagesZillow2013-05-13T11:30:00+00:00Homebuyers Clueless About Mortgages, Zillow Survey Findshttp://realestate.aol.com/blog/2013/05/09/homebuyers-clueless-mortgages/http://realestate.aol.com/blog/2013/05/09/homebuyers-clueless-mortgages/http://realestate.aol.com/blog/2013/05/09/homebuyers-clueless-mortgages/#commentsFiled under: , ,

home mortgages

By Les Christie

The housing market is heating up, yet many house hunters are not prepared to take on the biggest purchases of their lives. When it comes to mortgages, homebuyers answered basic questions about terms, how to choose a lender and financing wrong nearly one-third of the time, according to an April survey of more than 1,000 current and prospective homeowners by real estate website Zillow.

Among the survey's findings, 31 percent of buyers don't think it's possible to get a mortgage for less than 5 percent down; 34 percent don't know what the term "annual percentage rate," or APR, means and 1 in 4 believe that you must close with the lender that pre-approves your mortgage.

"All too often buyers focus on negotiating a lower home price and ignore the importance of finding the right loan," said Erin Lantz, director of mortgages for Zillow. "Buyers should always shop multiple lenders and compare rates and fees and read lender reviews in order to find the best loan for their situation." One example: 34 percent of respondents believe lenders are required by law to charge the same fees to all clients for credit reports, appraisals and the like. That's wrong. Fees vary from bank to bank and can often be negotiated.

But it's hard to compare those deals if you don't understand what mortgage terms, like "annual percentage rate," mean. The APR factors into fees, upfront points, origination and underwriting fees and other costs that borrowers use to compare the actual cost of loans.

Such knowledge gaps can have long-term consequences. About 34 percent of first-time homebuyers think that they need a down payment of at least 5 percent to make a home purchase, but loans insured by the Federal Housing Administration can require as little as 3.5 percent down. And 24 percent of buyers believe the best mortgage deals are available through the banks where they currently have their savings and checking accounts, but often competing lenders can undercut those banks by large margins.

"If a homebuyer can lower their interest rate by even half a percentage point, they can not only increase their purchasing power, but save thousands of dollars over the life of the loan," said Lantz. For every $100,000 borrowed, a half percentage point lower rate would reduce payments by $28 a month on a 30-year, fixed rate loan. That adds up to more than $10,000 over 30 years. Or borrowers could choose to add that $28 savings to each monthly payment. That would shorten the term of the mortgage from 30 years to just over 27 and save $6,500 in interest paid.

Another costly mistake: Many house hunters go shopping with financing in place because it enables them to act more quickly if they see a home they want. But 26 percent of buyers believe that once they're pre-approved, they're obligated to close the deal with those loans, according to the survey. In reality, there's no obligation. If buyers see better terms available they should take them.

Existing homeowners can also be guilty of ignorance. Some 20 percent of homeowners surveyed didn't know that underwater mortgages -- those in which borrowers owe more than their homes are worth -- can be refinanced into lower rate loans.

Finally, the survey found that nearly a third of homeowners are unaware that if they go through a foreclosure or short sale, they may not have to wait the full seven years it takes for their credit score to recover and they can buy a home again. In reality, some homeowners who do short sales can obtain financing to buy another home in as little as two years.

The Consumer Financial Protection Bureau is hoping to make it easier for homebuyers with simplified mortgage forms that help them compare terms and costs and by creating new rules that will protect homeowners from getting into loans they can't afford.

See more on CNN Money:
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Best big companies to work for

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Find out how to calculate mortgage payments.
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Understanding Mortgages

 

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]]>annual percentage ratefinancial protection bureaufinancinghome financinghomebuyer informationhomebuyerslendersmortgagemortgageszillowCNNMoney2013-05-09T11:59:00+00:00Former Meth Lab Home For Sale -- Just Don't Ask to Look Insidehttp://realestate.aol.com/blog/on/meth-lab-home-for-sale-loudon/http://realestate.aol.com/blog/on/meth-lab-home-for-sale-loudon/http://realestate.aol.com/blog/on/meth-lab-home-for-sale-loudon/#commentsFiled under: ,

Former meth lab at 2380 Crock Road in Loudon, Tenn.

The newly listed home at 2380 Crock Road in Loudon, Tenn., seems like a steal: Four bedrooms, two bathrooms and selling for only $8,500. But maybe not, if you consider that the home is a former meth lab.

In 2010, three men were arrested and sent to prison for using the house to produce methamphetamine. The men left the home a "hazardous environment," authorities told Knoxville TV station WATE-Channel 6, and it was quarantined by the Loudon County narcotics team.

"We categorized this property as Level 3 of contamination. Level 3 out of 4," Lt. Paul Curtis, narcotics director at the Loudon County Sheriff's Office, told WATE.

Unfortunately the Crock Road home is hardly a unique case: In 2012, Jonathan and Beth Hankins purchased a $36,000 "fixer upper" in Klamath Falls, Ore. that also turned out to be a former meth lab. After the family had already moved in, a test kit showed that the home carried meth residue at about 80 times the state's legal limit for acceptable levels -- after it had been cleaned. In a similar case in Suquamish, Wash., John and Jessie Bates discovered that the home they'd bought was completely saturated with toxic chemicals used for making meth and was "not fit" to live in.

According to Scientific American, the chemicals used in meth production are so highly toxic that they permeate "every inch of the room where the meth was cooked and beyond." According to experts, a home's carpet, walls, furniture and even air become toxic, and ingesting some the chemicals might cause "immediate death." (Serious but non-fatal effects on the inhabitants of meth homes can also include migraines, nosebleeds, mouth sores and even cancer.)

It's no surprise then, that the Crock Road home is being sold "interior sight unseen" -- meaning that potential buyers are prohibited from going inside the home prior to its sale. But according to Lt. Curtis, this practice is unconventional, particularly as Tennessee state law prohibits the sale of any property to the public without a proper cleaning and inspection.

Despite that, WATE reports that the home might have been sold as early as yesterday. (The property is also currently showing as "sold" on Realtor.com). If indeed the home was sold, the new owners --if they move in -- would join the estimated "millions" of Americans living in properties that were former meth labs, according to CNN Money.




See more about hazards in for-sale homes:
Realtor Discovers Explosives Inside Nashville Home for Sale
Mansion or Meth House? 'Flip Men' Want to Know

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]]>2380 Crock Road Loudon Tenndrug busthomes for salemeth lab homesmeth labsmethamphetaminenarcoticstennessee homesAOL Real Estate Editors2013-05-07T13:45:00+00:00How to Buy and Sell a Home at the Same Timehttp://realestate.aol.com/blog/2013/05/06/how-to-buy-and-sell-a-home-at-the-same-time/http://realestate.aol.com/blog/2013/05/06/how-to-buy-and-sell-a-home-at-the-same-time/http://realestate.aol.com/blog/2013/05/06/how-to-buy-and-sell-a-home-at-the-same-time/#commentsFiled under: , ,

buy and sell simultaneously chart

By Brendan Desimone

Now that the real estate market is picking up again, many people are looking to sell their homes at last. But when you sell, you have to move somewhere -- which usually means buying another home. Buying and selling at the same time brings up a whole new set of challenges, but those who plan well in advance can make it happen smoothly. Here are five ways to successfully buy and sell a home at the same time.

1. Prepare to be stressed. Buying a home is stressful. Selling a home is stressful. When you do both at the same time, the experience is super stressful, not to mention emotional and difficult on many levels. You're potentially carrying two mortgages or trying to time the purchase with the sale. There will be a lot of sleepless nights, worrying over finances and pressure to make a decision. It's enough to ignite a family war.

Accepting upfront that this process will be extremely stressful will help in the long run. Know that most homeowners go through this, and there is success at the end of the long, dark tunnel. Plan everything as much as possible in advance. Do your homework. And take care of yourself. You're going to be busier than usual.

2. Meet with your agent early on. Owners often believe their home is worth less than what the current market will bear. That's why it's important to meet with your real estate agent early on, even months before you plan to buy or sell. Researching online valuation tools or doing basic research will help to guide you. But a local agent will help you understand your home's true current market value and marketability. A good agent is in the trenches daily and knows your neighborhood and market inside and out.

3. Learn the market where you want to purchase. After getting some hard numbers for your home's sale you need to do the same on the purchase side. What's on your wish list? What are your priorities? Determine your needs and understand what you will get for your money on the purchase side. You need to know this to factor in how financing will work with the buy/sell. Also, understand that market. Is it more or less competitive than where you live now? How long can you expect to search for a home? This will factor into your sale timing. If you're moving within the city or town where you live, your listing agent will likely serve as your buying agent. If you're moving just outside your area, you may need to ask your agent to refer you to an agent knowledgeable about that area.

4. Know your numbers. Once you understand the numbers on both the purchase and the sale, you need to know your financing options. Many people today don't have a strong-enough financial foundation to purchase another home before selling their own, so knowing this upfront can help you plan more appropriately.

Engage a local mortgage broker or lender and understand what kind of down payment you'll need to make a purchase, given the price point and type of home you seek to buy. How much equity do you have in your current home, and is the equity available? Do you have enough of a down payment liquid and would a lender allow you to make the purchase before selling the home? Find out by going through the loan pre-approval process. A good, local mortgage professional is as valuable as a good real estate agent.

5. Make a plan. Now that you know your numbers, it's time to come up with a plan and execute. The plan can vary greatly, depending upon any number of conditions. Some examples: Buying in a competitive market? Adding a contingency that your current home must sell before you buy probably won't work.

o. Selling in a competitive market? You may be able to negotiate with the buyer for a longer escrow or even a rent back. This would buy you time on the purchase side.
o. Selling in a slow market and buying in a competitive market? Need the sales proceeds in order to do the purchase? Unfortunately, you're in the worst-case scenario. Consider the option of selling your home first and moving into temporary housing. While not the most physically convenient, it could be less stressful.
o. Need temporary housing? Start researching those options now well in advance

Understanding the variables: There are so many variables that can come into play when buying or selling. Each one may affect your decision-making process. Identifying and planning for the variables as much as possible early on will help you avoid sleepless nights, stressful days, or fights with your spouse or partner.

See more on Zillow:
Superhero Actor Chris Evans Wins Bidding War on Hollywood Home
Real Estate Q&A: 1031 Tax-Deffered Exchanges and Renters Insurance Coverage
'Baywatch' Days Remembered as David Hasselhoff Sells Home

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First Impressions Sell Homes

 

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]]>buying a homebuying a housebuying and sellinghomebuyershomebuyingsell a homeselling a homespring buying seasonspring buysZillow2013-05-06T14:50:00+00:00Chinese Couples Divorce Before Buying Home to Avoid Property Taxhttp://realestate.aol.com/blog/on/chinese-couples-divorce-buying-home/http://realestate.aol.com/blog/on/chinese-couples-divorce-buying-home/http://realestate.aol.com/blog/on/chinese-couples-divorce-buying-home/#commentsFiled under: ,

chinese couples divorcing

While more and more young couples in the United States are sealing their commitments to one another by buying a home before marriage, thousands of "happily married" couples in China are rushing to get divorced -- before buying a home together. Why the seemingly backwards move? According to Time, it's a direct result of soon-to-be-enacted government regulations in China that will hike taxes on the sale of second homes for married homeowners.

The regulations are part of a package of measures that will require couples to pay a capital gains tax of up to 20 percent on the sale of second homes -- a huge hike from the current tax of 1 percent to 2 percent. According to Reuters, the tax on gains from selling second homes has actually been in place for almost two decades -- but it hasn't been strictly enforced until now. According to TIME, determined investors won't let that get in the way of a good bargain: the 20 percent tax won't apply if the second home was bought after the couple was divorced.

Which, for many Chinese couples, isn't such a big deal: Divorce in China, after all, is not the lengthy and expensive ordeal that it is in the United States. In fact, Chinese couples are able to get a "quickie" divorce by simply presenting themselves, together, at the marriage and divorce registration center and paying a fee of only $1.50. (Some centers have reported as many as 53 divorces processed in just one day). Once the sales are complete, the couple is free to remarry.

"It's a practical attitude," managing director of realty consulting firm International Strategic Group Li Li told Reuters. "It's strange, but policy forces people to do it."

Even the officials at the registration offices agree it's a smart move. "I told all of them to come here again for remarriage registration as soon as their transaction is finished," one official told the Shanghai Daily.

See more on first-time homebuyers:
Millennials Forge Fresh Trends in Homebuying
Should Young People Buy Homes? Weighing the Pros and Cons

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Chinese Buyers Hunt for the Perfect Second Home

 

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]]>buying a homebuying home before marriagechina property taxeschinese couples divorceproperty tax chinaproperty taxesAOL Real Estate Editors2013-05-01T12:00:00+00:00Are Real Estate Commercials Skirting Realities of Homebuying?http://realestate.aol.com/blog/on/real-estate-commercials-homebuying-reality/http://realestate.aol.com/blog/on/real-estate-commercials-homebuying-reality/http://realestate.aol.com/blog/on/real-estate-commercials-homebuying-reality/#commentsFiled under: ,

You've probably seen those real estate commercials. You know, that one where where the guy's brushing his teeth, the woman's blow-drying her hair and singing in operatic tone, and the overweight man's coming in to take a bath. All in the same bathroom:



Or that one with that sweet song and the woman clicking on a house and envisioning her little boy jumping in the pool:



Realtor.com's hysterical "Find It First" and Zillow's touching "Find Your Way Home" ad campaigns are just a couple of pushes hitting the airwaves and the Internet to grab homebuyers' attention at a critical time in real estate: the ever-important spring homebuying season. The ads by Realtor and Zillow (both of which are AOL Real Estate partners) are clever, that's for sure. But are they sending the right message to buyers who are nervously re-entering the market after years of housing tumult?

While it's a smart time to put ad dollars to use, some critics say that these real estate commercials are skirting a larger responsibility to actually educate people about what's happening in the housing market. Now's the time, they say, because people could be jumping back into homebuying based on the louder and louder message that housing is back -- without knowing what they're doing any better than they did years ago. (But of course it is advertising -- which by its nature is meant to make us want stuff we don't necessarily need or can afford.)

Alexis Moore, a financial risk management consultant and consumer advocate who has been a Realtor in California, said that the commercials don't go deep enough into the factor at play in the housing market today. "The advertisements are missing the boat in a big way and frankly are insulting in a lot of ways to the industry," she said, "because they are not in tune with the real issue: rebuilding public confidence in the entire industry."

Here's a fact not mentioned in the Realtor or Zillow commercials: While home values have roared back in many parts of the country, for-sale inventory is at a startling low (much lower than typical levels during the busy spring homebuying season). That suggests that a whole lot of sellers aren't confident enough in the housing market to put their homes up for sale. And though home prices in February reached a seven-year high, that was driven largely by fat-pocketed investors, not everyday homebuyers. That could be because many still can't qualify for a mortgage under stricter regulations.

"Instead of using the same marketing tactics and campaigns of years past during the real estate boom years, they are missing a chance to build public confidence and restore the industry as a whole as being 'renewed' with real information about what has changed in the industry," Moore said.

Barbara O'Connor, executive vice president of marketing at Move Inc., which powers Realtor.com, argues that Realtor's "Find It First" campaign does what any ad should do: grab people's attention. But once viewers are hooked and persuaded to visit Realtor.com, that's where they'll get real information on housing statistics in individual cities and neighborhoods. Both Realtor and Zillow (like AOL Real Estate) have home-value tools, mortgage calculators and other housing information broken down by area.

"These ads use humor to grab people's attention, pointing a lens at the current historic competitiveness of the marketplace," O'Connor said. "Once consumers click through to Realtor.com, we have comprehensive information available to educate potential homebuyers on the current state of the housing market."

"People will shop for a new home when they're ready to shop for homes," said Amy Bohutinsky, Zillow's chief marketing officer. "The objective of our ads is not to convince people it's time for them to buy. Rather, our objective is to help people understand what Zillow has to offer -- that it's a great resource for shopping for homes -- so that when they're ready, they'll try us out." She added that Zillow's ads do show features such as its home value calculator to show what tools the company offers to aid homebuyers' decisions.

Jason Sherman, a real estate investor and founder of Sherman Communications & Marketing, said real estate companies are wise to be advertising now while the market is hot. "But, to be more credible, they should also speak to why now's the time -- address the fundamentals that are in place [in the housing market] -- in their PR and advertising," he said.

Before ads seduce you with the promise to convert the dream of homeownership into reality, prospective homebuyers should take the time to see if buying a home is affordable for them to begin with. Find out what current mortgage rates are, and use mortgage calculators to estimate what your monthly payment would be, for starters.

What do you think? Do today's real estate commercials have a responsibility to present deeper information about the factors at play in the housing market? Tell us in the comments below.

See more about real estate ads:
Realtor Raps on Tight Inventory: 'All the Houses Gettin' Sold'
The World's Most Deceptive Listing?
Give These Realtors a Reality Check!

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]]>advertising campaignhome priceshousing markethousing recoveryreal estate commercialsRealtor.com Find It FirstZillow commercialsZillow Find Your Way HomeGraham Wood2013-04-30T23:59:00+00:00Builders Hold Lotteries for Eager New Homebuyershttp://realestate.aol.com/blog/2013/04/30/home-lotteries/http://realestate.aol.com/blog/2013/04/30/home-lotteries/http://realestate.aol.com/blog/2013/04/30/home-lotteries/#commentsFiled under: ,



CNN Money logoBy Les Christie

Demand among homebuyers is so high in some parts of the country that builders are holding lotteries to decide who gets to purchase homes in their developments. O'Brien Homes started holding a monthly housing lottery for its 228-unit development called Fusion in Sunnyvale, Calf., after seeing throngs of prospective buyers camp out at the openings of other new condo complexes in the area. "We didn't want that," said Susie Frimel, a spokeswoman for O'Brien Homes. "We wanted our customers to be pleased with the process."

Each month, as new sections of the development came under construction, roughly 50 buyers would show up at O'Brien Homes' sales office hoping to be picked for one of the 10 or so sites available. The participants were already pre-qualified for a mortgage and had their down payment in place. After being assigned a number on a bingo ball, they crossed their fingers and waited for each ball to be plucked from the tumbler.

For each unit, the company drew a winner and a back-up, just in case the winner backed out. Lotteries are not a perfect solution, especially for the buyer who walks away empty-handed. "Some people would come back month after month," said Frimel. "It got very frustrating for them."

Related: Homes for Sale in Your Area

Adding to that frustration was that home prices rose virtually every time a new group of homes went on sale. The two-, three- and four-bedroom homes started out between $420,000 and $620,000. The last grouping went for $555,000 to $815,000, a 32 percent increase. Even with the price hikes, buyers kept returning. O'Brien started issuing returnees an extra bingo ball. If they lost for four straight months, they would get five chances the next time.

The last available home in the complex closed last week. Some customers got shut out. For Frimel, that was one of the hardest things to watch. She had gotten to know many of the regulars well. In addition to O'Brien Homes, other Bay Area builders are also using lotteries, including Shea Homes at a development in Livermore, Calif., and Shapell Homes in San Ramon, Calif.

But lotteries aren't just taking place in California. In northern Virginia, Camberley Homes held a lottery to sell two model homes in a new community called One Loudoun last week. More than a dozen people participated. In Florida, GL Homes held its first lotteries since the housing bust. In mid-April, the company sold off 11 of its model homes in Delray Beach, Fla., in its first lottery in more than five years.

"Our homes are at a price that we are willing to accept and not force customers to potentially get into a bidding war," said GL Homes division president Marcie DePlaza. "So for us, the lottery is the fairest way to determine the priority in which customers will be able to purchase our model homes."

Last weekend, more than 1,000 people showed up for a sale of lots in its Boynton Beach, Fla., community featuring homes ranging from the high $300,000s to the low $600,000s. GL Homes held a lottery, in which 75 homebuyers entered to win their first choice of lots. "We set up a big tent outside the sales office to handle the crowd," said DePlaza. "We had them write out pink index cards and we put them in a tumbler. The first winner was so excited, she was crying."

Buyers seem to prefer the lottery system to competitive bidding or trying to be the first in line when a home goes on the market. "I thought the way [GL Homes] handled it was very professional," said Neal Rosen, a math teacher who, with his wife Felicia, participated in a the lottery on April 20. "There was no rushing. They had plenty of food. And I got the lot my wife and I agonized over for three weeks."

To keep up with all of this surging demand, builders are trying to build faster, according to Glenn Kelman, founder of real estate broker Redfin. "Builders are trying to get as much inventory to market as they can," he said. After the hard times of the housing meltdown, builders are savoring the return of the buyers. "We went years without having to resort to lotteries or camping out," said DePlaza. "We're thrilled to see them back."

See more on CNNMoney:
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Contingencies for Homebuyers

 

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]]>bidding warsbuying a homehome lotterieshomebuilderslotteriesOBrien HomesCNNMoney2013-04-30T11:00:00+00:0010 Most Popular Home Improvements That Buyers Will Pay More Forhttp://realestate.aol.com/blog/2013/04/29/most-popular-home-improvements/http://realestate.aol.com/blog/2013/04/29/most-popular-home-improvements/http://realestate.aol.com/blog/2013/04/29/most-popular-home-improvements/#commentsFiled under: , , ,

If you've tried to sell a home in the last few years, you know how hard it can be to get the price you're asking for. Even now as the housing market heats up and bidding wars are breaking out in parts of the country, it's still an uphill battle selling for the right price. But if your home has the right features, that can help score a higher bid from buyers -- maybe even more than you were asking for.

According to a recent National Association of Realtors survey looking at which home features are most desirable to buyers, 24/7 Wall St. analyzed the top 10 home improvements that homebuyers are willing to pay more for. Many of these features center around the kitchen, and some of these improvements could snag a seller thousands more from an interested buyer. Of course, these features aren't necessarily the most important deciding factor for homebuyers, Brendon DeSimone, a Zillow real estate expert, told 24/7 Wall St. The location -- proximity to good schools, neighborhood safety and commute -- will be the biggest factors weighing on buyers' minds, he said. But having some of these features inside the home can only help. Click through the gallery below to see the 10 most popular home improvements that buyers want.

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See more on 24/7 Wall St.:
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Increase Home Value by Remodeling

 

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]]>buying a homehome improvementhome improvement high selling priceselling a home24/7 Wall St.2013-04-29T12:30:00+00:005 Tips for Buyers Who Want a Million-Dollar Homehttp://realestate.aol.com/blog/2013/04/26/buying-million-dollar-homes/http://realestate.aol.com/blog/2013/04/26/buying-million-dollar-homes/http://realestate.aol.com/blog/2013/04/26/buying-million-dollar-homes/#commentsFiled under: , ,




By Dolly Lenz

Called the "Queen of Real Estate" and even "Jaws" for her aggressively successful tactics, super broker Dolly Lenz (pictured in the inset above) has sold over $8.5 billion dollars in high-end properties, catering to clients like Barbra Streisand, Billy Joel and P. Diddy. Now she's revealing five tips to buying a million-dollar home.

In a Buyer's Market: Be Aggressive

In a buyer's market, sellers have fewer options. Buyers are scarce and, therefore, they have the upper hand in that they are better able to dictate terms. In this instance, buyers can be aggressive in their bidding and are free to probe how motivated a seller is to sell. In this environment, buyers should consider asking the seller to pick up certain closing costs, include furnishings as part of the deal, and even request seller financing.

In buyer's markets, sellers become very competitive with one another and buyers can use this to their advantage. Buyers should not be shy about using one seller against another and see which one will offer a better deal. This is especially advantageous in neighborhoods which have similar homes and buyers are indifferent about which property they prefer.

In a Seller's Market: Be Prepared

In a seller's market, multiple bids on the same property are common as inventory levels are low. Nothing gets a seller's attention more than a buyer who is both ready and able to consummate a deal. For this reason, potential buyers have to be prepared before they start bidding. Obviously, cash is king and those paying cash are in a commanding position to seal the deal with a seller. But for most buyers, financing is a necessary element to a purchase, and those bidding with commitment in hand stand a much better chance of attracting a seller's attention than those without.

Demonstrating an ability to act quickly is also desirable to sellers. This obligates a buyer to be responsive to a seller's communications in real time and be prepared with pre-approved financing, a closing attorney and a flexible closing date. Most people think that the bidder offering the highest price will get the deal but often that is not the case.

Savvy sellers evaluate all the terms of a deal as a package and price is only one factor. For example, most sellers will find a $1 million offer with a commitment letter for 70 percent financing superior to a higher offer of $1,060,000 with a contingency of 80 percent financing, unless the buyer with the higher offer can demonstrate likelihood that they will obtain the necessary financing.

Beware the Onerous Mortgage Contingency

In negotiating a deal, both buyers and sellers assume risk. Just as you are taking a risk by agreeing to buy, a seller takes on risk by agreeing to sell. Naturally, a seller wants a deal with zero contingencies, to eliminate the likelihood of the buyer backing out, while a buyer wants a deal with as many contingencies as possible, should his circumstances change.

The mortgage contingency is a major contract issue for both buyer and seller, and as a buyer you want to obtain terms that are favorable to you. Failure to do this properly could jeopardize your contract deposit. The key element is to establish a maximum amount you are going to finance, and the higher the percentage you can get in the contract, the better off you'll be. The seller will try to negotiate a lower percentage, but the key is to establish a number that you are comfortable with.

See more tips to buy a million-dollar home at CNBC.

See more on CNBC:
Why Housing Stalled: $1 Trillion in Student Debt
CNBC Explains REO
CNBC Explains Jumbo Mortgage

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Negotiating a Home Purchase

 

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]]>bidding warsbuyers marketbuying a homehigh-end homeshigh-end real estatemillion-dollar homesmortgagesnegotiating a home purchasesellers marketCNBC2013-04-26T08:00:00+00:00Renting vs. Owning: How Do You Know Which Is Right for You?http://realestate.aol.com/blog/2013/04/25/renting-vs-owning-which-is-right-for-you/http://realestate.aol.com/blog/2013/04/25/renting-vs-owning-which-is-right-for-you/http://realestate.aol.com/blog/2013/04/25/renting-vs-owning-which-is-right-for-you/#commentsFiled under: , , ,

By Benjamin Feldman

At this time, when housing prices are starting to rebound and interest rates are still very low, a lot of people are saying that you should buy a house in 2013. But is homeownership the right choice for your finances? The answer, of course, is "it depends." However, for many of us there is a clear answer based on where we live, how much money we have saved up, and what our future plans are.

The "Rent vs. Own" debate has been raging for decades, and will no doubt continue for many decades to come. Here are some important factors you should consider to help determine whether renting or owning a home is the right decision for you.

Basic Market Trends

Have you ever heard the saying that the three most important criteria in setting the value of a home are "location, location, location"? Well, that remains true today, but they might want to add: "timing, timing, timing."

Anyone who watched the gut-wrenching rise and fall of the housing market during the past 10 years can readily attest to the fact that timing has a lot to do with whether a house purchase becomes a good investment or metaphorical anchor tied to your finances.

Just looking at a graph of the Case-Shiller index shows how rapidly home values can increase and decline. The line on the graph looks like a roller coaster -- it goes up and up and up and then drops back down, all in the span of a few years. You want to avoid buying a house at the peak of a housing bubble, obviously!

But how to avoid it? To help you navigate these market variations, I'd recommend using something called the "price-to-rent" ratio. This is a formula that takes into account the price of renting versus the cost of buying in your area (with many factors included) and gives you a sense of whether the market dynamics favor buying or renting. If are trying to evaluate this, look online for some handy calculators/charts/graphs that show you the price-to-rent ratio for your city. Also remember that interest rates for mortgages fluctuate over time and it's always better to lock in a low interest rate if you can.

Your Financial Picture

One of the main considerations you have to make is this: does your current financial picture put you in a strong position for home ownership? If not, then buying a house will not be a good idea no matter what the market trends indicate.

To evaluate your finances and see if you're prepared for homeownership, you'll need to sit down and look at all your financial accounts as well as your income and expectation of future earnings (not to mention job security).

First, look at any debt you have and calculate how long it would take you to pay it off. If you have a lot of consumer debt and especially if you're struggling to make your monthly payments, then this may not be a good time for you to buy. After all, homeownership is a big commitment, and if things go wrong you can end up on the hook for a big loan. You also won't be able to secure a good interest rate if your debt to income ratio is high.

With student loan debt -- something Americans of all ages are dealing with right now -- you can certainly buy a house as long as the monthly payments will not overwhelm you.

Your job security is also a very important factor because, as many people found out during the recession, losing a job while paying a mortgage can be extremely stressful and unpleasant. You can wind up being tied to a location that doesn't have good job prospects, burning through your savings, and possibly losing your house (and equity). So think carefully about any potential threats to your job and career before making the leap into homeownership.

How Much Do You Have Saved Up?

Assuming that you're not worried about debt paydown or losing your job, then the most important factor to consider is how much savings you have. Many home purchases require 10 percent or 20 percent as a down payment on a mortgage, and while there are programs for first-time homebuyers and other ways to lower your down payment to 5 percent (or even 3 percent in some cases), that will increase your monthly payment because it will mean your total loan amount will be larger.

The right down payment amount and home loan amount for you will depend on the factors mentioned above, but in general it's better to have a lot saved up before you apply for a mortgage If you have enough for a 20 percent down payment, you can feel more confident because (A) you're more likely to be approved for a loan and (B) your monthly mortgage payments will be lower. That can make all the difference in your foray into buying a home.

What Are Your Future Plans?

One of the things you always hear people talk about is that it doesn't make sense to buy a house if you plan to move in the next five years -- and this is absolutely true. Why? Because buying a house requires lots of fees and "transaction costs" -- these costs are unavoidable and can total up to 5 percent of the cost of the house or more.

That means if you buy a house and then quickly sell it again you'll have to pay both the costs of buying and the costs of selling (usually a 6 percent commission for the real estate agent who sells your property) in a short time period. And you won't live in the house long enough to enjoy the financial benefits of homeownership, such as appreciation in your home's value.

It still depends on the individual situation, of course, but the general rule is to avoid buying if you expect you'll need or want to move anytime soon. Ultimately, if you consider all the factors and determine how homeownership can affect your credit score, you will make a good choice.

See more on Credit.com:
Can You Really Get Your Credit Score for Free?
The First Thing You Must Do Before Buying a Home
The Ultimate Credit Report Cheat Sheet

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Find out how to calculate mortgage payments.
Find homes for sale in your area.
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Should You Rent or Buy a Home?

 

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]]>buying a homemarket timingRent vs buyrent vs ownrentingCredit.com2013-04-25T10:15:00+00:00Spring Homebuying 'Stuck' Under Tight Inventory, NAR Sayshttp://realestate.aol.com/blog/2013/04/23/spring-home-sales/http://realestate.aol.com/blog/2013/04/23/spring-home-sales/http://realestate.aol.com/blog/2013/04/23/spring-home-sales/#commentsFiled under: , ,

spring home salesBy Diana Olick

Like everything else in the spring, housing supply is supposed to grow. That's because warmer weather and the convenience for families to move during the summer make spring the busiest homebuying season historically. That is not the case this year. Home sales have been "stuck," according to Lawrence Yun, chief economist for the National Association of Realtors, because there is just not much out there to buy.

The number of homes listed for sale increased by just 1.6 percent in March from February, according to the NAR, but supplies are still 17 percent below where they were a year ago. Realtors usually see listings swell by about 100,000 in March, but this year they saw just 30,000 more. They are hoping to see 200,000 to 300,000 more in April, but that seems unlikely, given potential seller reaction to the recent fast price appreciation in the market.

"If I am underwater in my equity and now suddenly I'm not, but I'm up 5 percent and the market around me is appreciating 6, 7, 8, 9, 10 percent, why don't I wait and perhaps get a 10 percent return on my investment, not a 5 percent return," noted Richard Smith, CEO of Realogy Holdings.

Inventories are tightest on the low end of the market, where investors came in and bought most of the distressed properties and are now holding them as single-family rentals. There is about a four-month supply of homes priced under $100,000, while there is around a 12-month supply of homes priced over $500,000. That's why sales of those low-end homes are down 16 percent from a year ago, and sales of higher-end homes are up 25 percent, according to the NAR.

"The housing shortage is going to continue," claimed Yun, who says the builders need to ramp up housing starts by 50 percent. He admits that is unlikely to happen due to land, labor and supply constraints. Weak supplies are pushing home prices up far faster than wage growth, which is keeping first-time buyers especially on the sidelines. These buyers made up just 30 percent of the market in March, compared to the historical norm of 40 percent to 45 percent. They just can't compete with all-cash investors.

But if prices get too high, investors could leave the market. Their share was already down in March to 19 percent compared to 22 percent just one month ago. The danger is that they will start to unload the homes they own, which would bring much-needed supply back but which could also turn home prices in the other direction.

See more on CNBC:
Why Housing Stalled: $1 Trillion in Student Debt
CNBC Explains REO
CNBC Explains Jumbo Mortgage

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First Time Buyer Recounts Home Buying Process

 

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]]>home priceshome saleshousing inventorylow housing inventoryspring home buyingCNBC2013-04-23T10:00:00+00:00Realtor Raps On Tight Inventory: 'All the Houses Gettin' Sold'http://realestate.aol.com/blog/on/all-the-houses-gettin-sold-rap-video/http://realestate.aol.com/blog/on/all-the-houses-gettin-sold-rap-video/http://realestate.aol.com/blog/on/all-the-houses-gettin-sold-rap-video/#commentsFiled under: , ,




There are two things you can learn from the video above: housing inventory is really, really tight. ... and Realtors should never rap. Of course, that's just our opinion. And we're sure not everyone will heed our warning.

Brian Block in rap video Anyway, Realtor Brian Block of Re/Max Allegiance -- now the Lil' Wayne of home selling -- created a rap video called "Houses Gettin' Sold" about homes flying off the market in the Northern Virginia and Washington, D.C., area. Housing inventory has been strikingly low across the country, frustrating many house hunters who have been finding themselves in fierce bidding wars for almost every home that is for sale. And that's particularly true for the D.C. area, where "there's just over one-month supply of homes on the market," Block said in a blog post on ActiveRain.com.

Block illustrates that point in a rhyming duet with a lovely lady in his video. The woman raps: "I'm lookin' for a house / drivin' all around / it's a very hot area / I've been told." Block pops up with a stop sign and a lyrical retort: "Stop! ... All the houses getting' sold."

Yeah. Despite its information about the local market, after watching it don't say we didn't warn you.

See more on on housing inventory:
Realtors Try Cold-Calling
Housing Is Back! Best Moves for Homebuyers
U.S. New-Home Sales Jump to Highest Since July 2008

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]]>all the houses gettin soldbrian blockhomebuying tipshousing inventoryrealtorsviral videoGraham Wood2013-04-22T13:11:00+00:00Why Buyers Should Consider Foreclosures or Short Saleshttp://realestate.aol.com/blog/2013/04/19/why-buyers-should-consider-foreclosures-or-short-sales/http://realestate.aol.com/blog/2013/04/19/why-buyers-should-consider-foreclosures-or-short-sales/http://realestate.aol.com/blog/2013/04/19/why-buyers-should-consider-foreclosures-or-short-sales/#commentsFiled under: , ,

By Brendon DeSimone

For years, many buyers routinely steered clear of foreclosures and short sales. In their minds, such properties were "damaged goods" -- real estate remainders that were likely to be dumps and money pits. Why risk such a big investment on a property sold in distress?

We're now in a housing market unlike any we've seen in years. Inventory is tight in many areas. Meanwhile, the poor economy of the past few years has produced more properties in foreclosure or offered as short sales. And so, as you enter the market either for the first time or as a seasoned buyer, you should be on the lookout for "distressed" sales. You might find a great property you'd otherwise have overlooked if you categorically disqualified foreclosures and short sales. And when the market is tight, looking at distressed properties makes even more sense.

The Risks to Buyers of Foreclosures and Short Sales

Foreclosures and short sales aren't just your typical buyer/seller situation. They involve more layers. In a bank foreclosure sale, also called an REO (for real estate owned), the bank is the seller. Because the bank employees have never lived at the home, they know nothing about the property. To them, the home you're considering buying is simply a statistic -- a cell within a large spreadsheet viewed by a worker behind a desk halfway around the country.

In the case of a foreclosure, the bank sells the home "as-is" and requires the buyer to sign dozens of documents releasing the bank of any liability. The worst-case scenario: You buy a foreclosure only to discover a major problem, such as a property line dispute or previous leaks that caused mold or dry rot.

When purchasing a short sale, the seller needs to go to their lender to "approve" the sale. In essence, the owner is trying to sell for less than the loan amount, so they need the bank to approve the sale. Historically, banks are slow to give the thumbs-up. This can lead to a situation in which a buyer waits for months for the bank to approve the short sale, only to have the bank reject it. Meanwhile, the buyer has missed out on countless other properties.

Reasons to Consider a Foreclosure or Short Sale Home

While there are clearly risks in buying a distressed property, we have so much more information now on homes than previous generations. Today's Internet-connected, savvy buyer can learn a great deal about foreclosed and short sale properties before signing on the dotted line. The old saying "no risk, no reward" certainly applies to foreclosures and short sale properties. Distressed sales tend to be priced from 5 percent to as much as 15 percent below the current market value.

Also, keep in mind that foreclosures aren't necessarily dumps. The recession impacted people in all income brackets. It's not unusual to find multi-million dollar foreclosures or multi-million dollar short sales in excellent condition and in good locations.

How to Minimize the Risks

If you're looking for a home in a market where inventory is tight, buying a home in foreclosure or short sale can be a great option. There are many ways to mitigate the potential risks:

o. Search town records for past building permits to see if anything out of the ordinary was completed or planned for the property.
o. Have the home inspected top to bottom before getting too far along in the process.
o. Knock on neighbors' doors to see what information they have about the home, the neighborhood or the previous owners.
o. Look at the home's previous sales records. Many times the homeowner tried to sell once or twice before becoming distressed. If that's the case, review the home's sales history. If there was ever a contract on it, chances are there might be an inspection report somewhere. Have your agent call the previous listing agent to find out more about the former owners or the property.

Look for Hidden Values

There may be absolutely nothing wrong with the property in foreclosure or sold in a short sale. The bank has discounted the home because it sells such properties as-is, without disclosures. If you do your homework, you can use this situation to your advantage. And should you learn of a major problem with the house, negotiate with the bank for a lower price. Don't forget: Banks aren't in the business of owning homes. They want these properties off their hands as soon as possible. Banks will take seriously any buyer who's well-qualified and ready to close a deal.

See more on Zillow:
Why Do Short Sales Take So Long?
How to Spot a Home That Might Sell Below Asking Price
Buying a Foreclosure? Watch Out for These 5 Landmines

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Find out how to calculate mortgage payments.
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The Pros of Buying a Short Sale Home

 

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]]>buying a homebuying foreclosuresbuying short salesforeclosuresshort salesZillow2013-04-19T11:00:00+00:00Tight Housing Inventory Slowing Down Business? Try Cold Callinghttp://realestate.aol.com/blog/on/tight-housing-inventory-slowing-down-business-try-cold-calling/http://realestate.aol.com/blog/on/tight-housing-inventory-slowing-down-business-try-cold-calling/http://realestate.aol.com/blog/on/tight-housing-inventory-slowing-down-business-try-cold-calling/#commentsFiled under: , ,



When housing inventory is as tight as it is -- it hit a 13-year low in January -- it gets pretty tough for buyers to even find homes for sale. And if you're a Realtor, that means slow business for you. There are very few buyers or sellers to represent. So what's a gal to do? Well, like any good salesperson looking to drum up business, you cold call.

That might seem like a telemarketer's job, but cold calling is becoming increasingly relevant to real estate. How does a cold call work for a Realtor? It's a little unconventional -- and maybe somewhat awkward -- but it's basically calling a homeowner and asking if he/she would be willing to sell the home. (Hopefully, they didn't just move in!)

As KUSA-TV in Denver reports, Realtors in that market are turning to the tactic as the supply of homes for sale dwindles further. According to KUSA, 6,682 homes were on the market in Denver in March, and about 6,000 of those went under contract. That's a fast-moving market! But does cold calling really work? According to Inman News columnist Bernice Ross, cold calling can score an agent some serious referrals and even listings. But you have to have patience, and don't give up (no matter how bad your fingers hurt from dialing). One bold real estate agent was able to score a client's dream home -- which wasn't for sale -- by walking up to the front door, knocking and asking if the homeowner was interested in selling. As it turns out, the homeowner was.

See more on homebuying:
More Young Couples Say 'I Do' to Buying a Home Before Marriage
Listing's Stale? 6 Ways to Land a Home Sale
VIDEO: Home Inspections for Sellers

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Find out how to calculate mortgage payments.
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]]>buying a homecold callinghome selling tipshousing inventoryrealtors cold callingselling a homeAOL Real Estate Editors2013-04-19T10:20:00+00:00