Stanley Team Altanta

WASHINGTON — Mortgage rates have reached their lowest levels in six decades, making this the best time in most Americans’ lives to buy or refinance a home. For people who qualify, today’s rates could save thousands of dollars a year.

Yet most people can’t take advantage. Half of would-be buyers say they’ll never save enough for the 20 percent down payment now usually required. And shrunken home values have erased much of the equity people need to refinance.

“Low rates are great, but the real issue is that the pool of people who can get a loan or refinance is small,” said Greg McBride, Bankrate.com’s senior financial analyst.

This week, the average rate on a 30-year fixed mortgage fell to 4.12 percent. It’s the lowest for a 30-year fixed loan since mortgage buyer Freddie Mac began tracking rates in 1971. The last time rates were cheaper was in 1951, when most long-term home loans lasted just 20 or 25 years.

The average on the 15-year fixed loan, a popular refinancing option, dropped to 3.33 percent this week. That’s also an all-time low, according to most economists.

Record-low rates have done little to energize depressed home sales. The average rate on the 30-year fixed loan has been below 5 percent for all but two weeks this year. Yet sales of previously occupied homes are on pace for their weakest year since 1997.

Too many would-be buyers can’t come up with a down payment, don’t have a job, lack enough income or are burdened by large debt loads.

Mortgage rates are low largely because investors are worried about the U.S. economy. As a result, they’re moving their money out of stocks and into U.S. Treasurys. Mortgage rates tend to track the yield on the 10-year Treasury note, which touched an all-time low this week.

A drop in mortgage rates could provide some help to the economy if more people could refinance. When people refinance at lower rates, they pay less interest on their loans and have more money to spend.

Consider a homeowner who owes $250,000 and is paying 5.09 percent on a 30-year fixed mortgage. That was the average rate on a 30-year fixed loan being offered in January 2010. Refinancing the loan at 4.12 percent could save him or her roughly $2,000 a year.

But many homeowners with good jobs and stable finances have already refinanced in the past year. The average rate on the 30-year fixed loan fell to 4.17 percent last November, and to 4.15 percent last month. Both were previous lows.

Homeowners typically pay a few thousand dollars in closing costs when they refinance. To refinance again, most experts say rates would need to fall an additional 1 percentage point to make it worthwhile.

Still, plenty of people could benefit from the low rates. More than 75 percent of homeowners with a government-backed mortgage are paying rates above 5 percent.

But most can’t qualify. Mike Anderson, a mortgage broker in Baton Rouge, La., said he’s turning away roughly 40 percent of customers seeking home loans and refinancing.

“I’ve never had to turn down so many loans upfront,” Anderson said.

Banks are insisting that applicants have higher credit scores and make 20 percent down payments if they are a first-time buyer.

Roughly 40 percent of U.S. households have the necessary credit scores above 700 to get a prime mortgage rate, according to an Associated Press analysis of Fair Isaac Corp., or FICO, data.

But just half of potentially buyers say they can save enough for a down payment, particularly one as high as 20 percent, according to a survey by the National Foundation for Credit Counseling.

Another problem is that nearly a third of homeowners either have less than 5 percent equity in their home or are “underwater” — that is, they owe more on their mortgage than their home is worth — according to the real estate research firm CoreLogic.

As a result, they can’t afford a down payment on a bigger home and can’t refinance because of lender-imposed limits and the cost of extra fees. The low rates now being offered don’t include such fees, which many borrowers must pay to get the rates. Those fees, known as points, make a mortgage rate, in effect, higher than it’s advertised.

One point is equal to 1 percent of the loan amount. The average such fee for the 30-year loan held steady this week at 0.7 point. For the 15-year fixed loan and for five- and one-year adjustable-rate loans, the average fee was 0.6 point.

Lack of equity is what’s keeping Don Meadows from refinancing. He owes $247,000 on a house in Orlando, Fla., and is paying 7 percent on a 30-year fixed loan. His monthly payment is $1,840.

If Meadows, 40, a sales manager, could refinance at today’s rates, he could save more than $400 a month.

But he has no equity in his home. He bought it two years ago for $274,000. It’s now worth $170,000.

“I couldn’t (refinance) even if I wanted to,” Meadows said. “Now, we just have to ride it out.”

There’s good reason that over half of all Americans are homeowners. Social and financial benefits are key factors when it comes to deciding to buy. Homeownership allows people to grow wealth slowly over time, to hold assets that build equity, and to bring stability into chaotic lives.

Despite these facts, homeownership rates have taken a hits since the recession in 2009. Falling home prices along with reduced access to credit has kept many would-be buyers from entering the market. According to Morgan Stanley, the current homeownership rate is around 59.2%. This is lowest rate since the Census Bureau began tracking in 1965. Has this reduction been a fear-based one?

The top benefits of homeownership haven’t changed, even in the face of a down economy. Here are the top five:

1. Savings: Be sure to check out the calculator at the end of this article. You’ll find that long-term homeownership is still a way to get big savings.

2. Tax Breaks: They’re not on the chopping block just yet. Many homeowners are still able to take the mortgage interest deduction (MID) each year, along with great rebates and credits associated with upgrades made to your home.

3. Equity: When you pay a landlord, it’s money down the drain. When you pay on a mortgage, you are paying towards owning a piece of something. You may still owe $100,000, but perhaps the home is worth $200,000. This means you have $100,000 worth of equity you’ve built up over time.

4. Budgeting: Unless you live in a rent-controlled apartment (and not many do), then each lease renewal could mean a jump in prices. A fixed-rate mortgage, however, means your monthly payment is the same amount for the life of the loan. A $1,000 a month payment on a 30-year mortgage is that same now as it will be in 30 years!

5. Security: When you own, it’s yours. You can paint, improve, and decorate. The trees and flowers are yours to enjoy — for a lifetime if you wish. Most homeowners are in neighborhoods with other homeowners, meaning more time to build relationships and friendships. Recent studies have also shown that homeowners rank themselves as healthier than their renter counterparts.

Should you rent or buy? For a strictly financial evaluation, be sure to check out The New York Times’ Interactive calculator to crunch the numbers. This advanced calculator takes into account everything from yearly costs to selling costs and broker fees.

Experts have recommended for years that if you’re planning on staying put for 5+ years, buying becomes an increasingly better deal. You have time to recoup any extra expenses found in closing costs and are now making an investment in your future through home price appreciation. Once your mortgage is paid off, you’ll have a real asset. That brings real stability.

Home affordability is at near record highs. Now is a good time to run the numbers and see if buying makes good financial sense. If it does, then you’re in store for a wealth of benefits that only homeowners can experience.

Published: August 30, 2011

If you’re currently renting and have dreamed of owning a home, now may be the perfect time. Trulia.com is reporting that during the month of July, buying was cheaper than renting in 74% of the country’s 50 largest cities.

However, in 12% of the cities, such as New York, Seattle, and San Francisco, you could rent a place for less than you could buy one. And in the rest of the cities (14%), it was about even, with renting being only slightly less than the cost of buying.

What’s tipping the scale to make buying cheaper than renting? Of course, it’s the declining home prices and historically low interest rates are also helping to encourage home buying. Recently, interest rates for 30-year and 15-year fixed have been hovering near 4%. Also, the increased demand for rental units is pushing rents up, making now a good time to buy as purchasing a home is cheaper than renting one in most major U.S. cities.

This is making purchasing a home enticing for those who are planning to stay for several years and have the ability to put down a downpayment of about 20 percent.

Where are the hot buying markets? Las Vegas tops the list. The S&P/Case-Shiller home price index, as reported by CNNMoney.com, shows that prices “have plunged more than 59% from their August 2006 peak.”

Other markets where buying beats renting include Detroit, Michigan; Mesa, Arizona; and Fresno, California. All of these are places where the cost of a median price condo/townhouse is approximately seven times annual rent.

And as reported by CNNMoney.com, Arlington, Texas; Sacramento, California; Phoenix, Arizona; and Jacksonville, Florida, “all had buy-rent ratios of eight,” according to Trulia.

New York is the highest city to rent a home (of the 50 markets surveyed). And to buy in that city would cost about 36 times as much, pushing the purchase price to about a million dollars.

If you’re renting now and wondering is this the right time, it really depends on your particular circumstances. Timing the real estate market is never a perfect science. However, the indicators are strong that if you can afford to buy, today’s market certainly offers many good opportunities.

Here are a few things to consider to help you make your decision.

The first is the length of time you’ll stay in the home. Moves are costly and purchasing a home requires extra cash for commissions and closing costs. So, if you’re not sure you can stay for a while, postponing buying might be the right choice. However, if you’ve been in your rental for a long time and have roots in your city, there are great deals on homes. It might be the right time for you to start paying your own mortgage instead of paying your landlord’s mortgage.

How much downpayment? This is a critical concern. With stricter lending requirements, having cash to put down is a make-or-break factor in purchasing a home. Buyers often have to come up with 20% and that can be a big chunk (or even all) of a person’s savings. Also, note that the money usually has to be “seasoned”. In other words, the downpayment money can’t just suddenly appear in your savings account only days before you decide to buy a home. Ask your real estate agent and loan officer for more details.

The cost of owning a home. Part of the thrill of owning a home is the fact that you own it. That means you’re responsible for everything inside and out. Of course, planned developments and Homeowner’s Associations may cover some of the outside maintenance but then you’ll be paying monthly fees. When considering whether to buy or rent, one of the things many first-time buyers neglect to think about is the cost of maintenance. When appliances break; you, the homeowner, will pay to fix them. No more landlord or apartment manager to the rescue. So, if you think things through and weigh the cost of rent versus the cost of buying, you may find the cost and the increased responsibility are well worth it because along with homeownership comes the pride of making your home yours exactly as you like it.

Peachtree Street just got a little more peachy.
Two brothers, Jeff and Matt Bowman of Georgia Farm to Table, last week opened Dewberry Market in the former Jock and Jills Sports Grill space at the corner of Peachtree and 10th streets.
The produce stand sells fresh fruits and vegetables six days a week.
“The produce is very good,” Midtown resident Marjorie Abbott said Wednesday morning as she shopped for corn. “I’ve been here every day.”
The Bowman brothers, who grew up in Sandy Springs, currently offer produce from local farmers including okra, eggplant, tomatoes, peaches and peppers. They plan to sell pumpkins in the fall and Christmas trees in the winter, Jeff said Wednesday.
“We focus on Georgia-grown and regionally grown produce in our desire to see Atlantans eat more local agriculture,” Matt said in an email. “We are trying to open up several more stands in neighborhoods throughout Atlanta.”
Dewberry Market is open Monday through Saturday, from 11 a.m. to 7 p.m. The brothers plan to offer free delivery to Midtown residents who spend at least $25.

Bank profits are up, while loan volume has been falling By Lawrence Yun

You already know from real-world experience that banks are not lending. But now your experience is backed by hard data from the FDIC. The agency found that in the year ending March 2011, bank deposits rose by $300 billion, assets grew by $80 billion, and profits were up by $12 billion. Yet loan volumes fell $260 billion to $7.24 trillion.

The banking industry’s old “3-6-3 rule” says that bankers pay 3 percent interest to depositors, make loans to depositors at 6 percent, and be out on the golf course by 3 p.m. That rule now seems to be replaced with a new 0-0-3 rule: Offer nothing to depositors and nothing to those who want to borrow, and earn 3 percent by buying tradable assets like ­government bonds.

To be sure, profit is not a bad thing. But when banks accumulate profit at the expense of doing what they’re in business to do—make loans—they put brakes on the economy.

We might already be seeing the consequences of that, with the economic recovery showing signs of sputtering. So it’s of little surprise that pending home sales in April took a tumble, falling 11 percent. Rising gas prices and unusually wet weather contributed to the slowdown. Whether home sales in the months ahead will also fall, we’ll have to wait and see. But if these overly tight lending conditions ­worsen, then a price decline in the ­double-digit range is clearly possible. Strategic defaults and foreclosures will rise, and bank balance sheets will deteriorate. A second recession is possible.

But this is a worst-case scenario. What’s more likely is that any additional price contractions will be modest. Home values have already fallen considerably, to historically justifiable levels. And in areas where jobs are strong, prices are solid or heading up. But the lesson is clear: A return to banking the old-fashioned way can speed the housing recovery.

Most Americans still believe that owning a home is a solid financial decision, and a majority of renters aspire to home ownership as a long-term goal. According to the 2011 National Housing Pulse Survey released today by the National Association of Realtors®, 72 percent of renters surveyed said owning a home is a top priority for their future, up from 63 percent in 2010.

Seven in 10 Americans also agreed that buying a home is a good financial decision while almost two-thirds said now is a good time to purchase a home. The annual survey, which measures how affordable housing issues affect consumers, also found that more than three quarters of renters (77 percent) said they would be less likely to buy a home if they were required to put down a 20 percent down payment on the home, and a strong majority (71 percent) believe a 20 percent down payment requirement could have a negative impact on the housing market.

“Despite the economic setbacks Americans have experienced in today’s current climate, it is clear that a strong majority still believe in home ownership and aspire to own a home,” said NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I. “However, achieving the dream of home ownership will become increasingly difficult for buyers if they are required to make a 20 percent down payment, which may be a reality for many of tomorrow’s buyers if a proposed Qualified Residential Mortgage rule is adopted. That is why Realtors® are strongly urging regulators to go back to the drawing board on the proposed rule.”

Defining the QRM rule is important because it will determine the types of mortgages that will generally be available to borrowers in the future. As currently proposed, borrowers with less than 20 percent down will have to choose between higher fees and rates today – up to 3 percentage points more – or a 9-14 year delay while they save up the necessary down payment.

Over half – 51 percent – of self-described “working class” home owners as well as younger non-college graduates (51 percent), African Americans (57 percent) and Hispanics (50 percent) who currently own their homes reported that a 20 percent down payment would have prevented them from becoming home owners.

Pulse surveys for the past eight years have consistently reported that having enough money for a down payment and closing costs are top obstacles that make housing unaffordable for Americans. Eighty-two percent of respondents cited these as the top obstacle, followed by having confidence in one’s job security.

The survey also found respondents were adamantly against eliminating the mortgage interest deduction. Two-thirds of Americans oppose eliminating the tax benefit, while 73 percent believe eliminating the MID will have a negative impact on the housing market as well as the overall economy.

“The MID facilitates home ownership by reducing the carrying costs of owning a home, and it makes a real difference to hard-working American families,” said Phipps. “Home ownership offers not only social benefits, but also long-term value for families, communities and the nation’s economy. We need to make sure that any changes to current programs or incentives don’t jeopardize our collective futures.”

When asked why home ownership matters to them, respondents cited stability and safety as the top reason. Long-term economic reasons such as building equity followed closely behind. On a local level, respondents said neighbors falling behind on their mortgages and the drop in home values were top concerns. Foreclosures also continue to remain a large concern, with almost half of those surveyed citing the issue as a problem in their area.

The 2011 National Housing Pulse Survey is conducted by American Strategies and Myers Research & Strategic Services for NAR’s Housing Opportunity Program. The telephone survey polled 1,250 adults nationwide, with an oversample of interviews of those living in the 25 most populous metropolitan statistical areas. The study has a margin of error of plus or minus 3.1 percentage points.

NAR’s Housing Opportunity Program, www.realtor.org/housingopportunity, was created in 2002 to encourage local Realtor® associations to create initiatives that help increase housing opportunities available to consumers and make affordable housing more readily available in their communities.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

As economic data continues to influence investors with their decisions, mortgage rates declined again last week bringing them to their lowest levels of 2011. Freerateupdate.com’s daily survey of wholesale and direct lenders show that conforming 15 year fixed mortgage rates decreased by .125% and are at 3.375%.

This is good news for borrowers who are interested in refinancing for a reduced term from 30 to 15 years. 5/1 adjustable mortgage rates also dropped by .125% and are at 2.625% which should begin to bring some interest back to ARMs. Conforming 30 year fixed mortgage rates are at 4.250%, remaining the same this week. Borrowers need to have good credit to receive these low mortgage rates with 0.7 to 1% origination fee, as well be ready to provide the required documentation that is necessary for lender approval.

Although FHA mortgage rates have been steady for awhile, this is not affecting the popularity that FHA mortgages have gained over the past several years. FHA offers borrowers, especially first time home buyers, benefits that cannot be found with other mortgage loans. Even with a credit score as low as 580, a low down payment of only 3.5% is required. Approved gifts and housing grants are also acceptable making the mortgage transaction even more affordable.

Current FHA 30 year fixed mortgage rates are at 4.250%, FHA 15 year fixed mortgage rates are at 3.750% and FHA 5/1 adjustable mortgage rates are at 3.000%. While FHA closing costs (APR) tend to be higher because of the upfront mortgage insurance premium and other applicable FHA fees, the benefits are still drawing borrowers to turn to FHA for their mortgage loans.

Good news rolled in for jumbo mortgage loans this past week when jumbo 30 year fixed mortgage rates dropped by .125% and are currently at 4.875%. Jumbo 15 year fixed mortgage rates are at 4.500% and jumbo 5/1 adjustable mortgage rates are at 3.625%. Jumbo mortgage loans are on the rise as high end borrowers are jumping on these low jumbo mortgage rates while they are here. These are the lowest jumbo mortgage rates available with 0.7 to 1% origination fee to borrowers who have maintained excellent credit and can provide documentation necessary for lender approval.

The jumbo mortgage market is not over saturated at this time because of the higher conforming loan limit which is set to decrease to the original amounts this October. This may change as more homes become part of the jumbo mortgage market again.

Markets continue to be volatile as the European debt crisis continues to be a cause of concern to investors. The U.S. debt ceiling agreement is also creating jitters throughout worldwide markets. MBS prices (mortgage backed securities) have become unpredictable each day as economic data is released. Just as unpredictable are mortgage rates which move in the opposite direction of MBS prices. Last week, China reported positive economic growth while here in the U.S., Ben Bernanke reported that additional stimulus action will be taken if necessary. Weekly jobless claims dropped and homebuilder confidence is up, but neither is doing anything for consumer sentiment which is at the lowest level since March, 2009.

FreeRateUpdate.com surveys more than two dozen wholesale and direct lenders’ rate sheets to determine the most accurate mortgage rates available to well qualified consumers at a standard .07 to 1% point origination fee.

Rogue movers want to take you and your belongings for a ride.

Peak moving season, Memorial Day to Labor Day, is underway. It’s the period when more than half the nation’s millions of households move every year and need moving services.

Fly-by-night rogues know the season well and are out in force making their own moves.

Rogue movers attempt to put the moves on financially struggling consumers who may have been crushed by the economy, are forced to move, but are short on cash. They are also after those who have to move quickly, for whatever reason, say to take advantage of a new job in another town.

Rogue movers prey on your vulnerabilities, your ignorance and your inability or unwillingness to take time to vet your mover.

Moving experts are warning consumers that disreputable movers often make it their business to lure you with low estimates. Later, those estimates can mount with exorbitant charges and the threat of holding your household goods hostage until you pay what amounts to a steep ransom.

“Anyone with a website can claim to be a mover,” said Carl Walter, vice president of Mayflower, one of the nation’s oldest and highest rated moving companies.

“It’s important to do some homework to avoid falling victim to a scam. There are a number of red flags that make rogue movers stand out, but to recognize them you have to know what to look for ahead of time,” Walter said.

Mayflower and others offer these moving tips.

• Get a referral from friends, family, co-workers or others you trust who’ve recently enjoyed a no-headaches move. You want to vet three moving companies with offices in your area. The best typically have at least a 10-year track record of being in the business.

The American Moving and Storage Association can help with referrals and J.D. Power and Associates and others rate moving companies.

• Be sure the company is what it says it is. Some crooked movers are “sock puppets” attempting to lure in customers by using names similar to reputable companies. Check the reputable company’s website to make sure the local agent is affiliated with the brand name.

Also check in with your local Better Business Bureau to learn of any complaints.

• Know your rights. If you are moving across state lines visit ProtectYourMove.gov to find out if a mover is licensed for interstate moves by the Federal Motor Carrier Safety Administration (FMCSA).

Another red flag is a mover not giving you a copy of “Your Rights and Responsibilities When You Move,” a disclosure brochure created by the FMCSA to outline your rights. Federal law requires movers to give the brochure to customers prior to an interstate move.

• Take no guesstimates. Demand an in-home visit for the estimate. Transportation charges are based on distance and weight of the items to be moved. You can’t get an accurate estimate unless the moving company gives your stuff the once over.

• The lowest price isn’t always the real deal. Rouge movers typically lowball prices, but later hit customers with unreasonable charges and, in some cases, hold onto belongings until the fees are paid. One estimate substantially lower than others is a big red flag.

Consumer Reports offers tips and insight on making a move.

• Never pay up front. You should not be required to pay a deposit to have your items moved. Legitimate companies request payment upon delivery.

• Get everything in writing. Ask for the estimate, pickup and delivery dates and other documents in writing.

“Moving can be a stressful event no matter how well the mover does its job,” said Walter.

“Mayflower understands this and wants to help all consumers who are planning a move to have a better moving experience, regardless of which mover they choose,” Walter added.

Many second-home owners — especially those in the full-time vacation rental business — are looking to purchase another property but are facing stringent financing guidelines. The same challenges, even with historically low interest rates, are plaguing first-time investors seeking to get started.

HomeAway, the online vacation rentals company, recently hosted a second-home owners’ summit featuring sessions on marketing, scheduling, screening and property management, also offered sessions on alternative financing. The company is an online vacation rental site that hosts an inventory of about 520,000 vacation rentals in 120 countries.

Christine Karpinski, the author of “How to Rent Vacation Properties by Owner and Profit From Your Vacation Home Dream,” hosted several sessions and offered financing observations:

• Yes, it’s cheaper to borrow … but it’s also much tougher. The easy-money days are over. In fact, you probably already know that loans are not easy to get in the post-housing-crisis economy. If you plan to take out a mortgage on that vacation home you want, be prepared to put more money down — 20-30 percent is the going rate for investment properties.
• Homeowners associations and building associations are under the microscope. Lenders are scrutinizing these associations more closely than ever. When members were unable to pay their monthly dues during the throes of the housing crisis, many homeowners associations went in the red. Lenders are conscious of these problems and don’t want to lend money for a building or property where there is no money to take care of it.
• Expect appraisers to be more stringent than they once were. This is actually a bittersweet thing for the buyer because it means the appraisal amount will be more accurate (i.e., not inflated) than it might have been years ago.

Conference attendees were encouraged to consider alternative methods for financing, including reverse mortgages, individual retirement accounts, tax-deferred exchanges from commercial properties, and seller financing.

A reverse mortgage historically has enabled senior homeowners to convert part of the equity in their homes into tax-free funds without having to sell the home, give up title, or take on a new monthly mortgage payment. However, funds may be used for any reason.

Reverse mortgages are available to individuals 62 or older who own their home. The maximum amount of funds received is based on age, current interest rates and a current home appraisal. Funds obtained from the reverse mortgage are considered tax-free.

The rules for purchasing real estate with an individual retirement account (IRA) are specific and differ greatly from those that govern conventional rentals and second homes. For example, you cannot buy a second home with an IRA and use it partly for personal use, even though you might rent it to unrelated persons the rest of the year.

And an IRA cannot purchase a real estate asset and then have a “disqualified” person (family member) use it while it is in the IRA. The purchase must be for an investment property and no personal use — until retirement. Then, the individual can move in to the property and pay tax as if taking a disbursement from a conventional account.

A tax-deferred exchange (commonly known as IRS Section 1031 Exchange) is really an arm’s-length sale and purchase. The transaction proceeds just as a sale for you, your real estate agent and parties associated with the deal. However, provided you closely follow the exchange rules, the IRS will “sanction” the transaction and allow you to characterize it as an exchange rather than as a sale. Thus, you are permitted to defer paying the capital gains tax.

An exchange occurs when you trade real property that is other than your home or second residence for other “like kind” real property that you have held for trade, business or investment purposes. The like-kind definition is very broad. You can dispose of and acquire any interest in real property other than a home or a second residence. For example, you can trade raw land for income property, a rental house for a multiplex, or a rental house for a retail property.