Print written by Steven Hyman on Sunday, June 28, 11:35AM
The tightening lending requirements by the banks have made it very hard for some people to get a mortgage. For others, it's outright impossible. Today the banks are overreacting to the liberal practices they had in the past by requiring almost all loans to be fully documented with tax returns, bank statements and higher credit scores. The only thing they haven't asked for yet, is a copy of your latest physical exam with the meds you're on to make sure you're healthy enough to make payments. But who knows, that may be required next week.
This overreaction has really made it tough for many groups of people who have done everything right and are sitting on a pile of equity. With stock portfolios down and loans for lines of credit hard to find, getting a hold of cash is much harder.
The tough lending standards have really impacted senior citizens. Even though many older couples may own their homes, have 401Ks, and have social security income, they still might not qualify for a loan in today's environment. Recently, I've seen a few well established clients turned down for small loans. A year ago this would have been a no-brainer.
Reverse mortgages
Well there is good news for these people with special type of financing that's offered through U.S. Dept of Housing and Urban Development (HUD). It goes by the long name of Home Equity Conversion Mortgage Purchase Program (HECM) but most people know of it as Reverse Mortgages.
A reverse mortgage is a special type of home loan that lets you convert a portion of the equity in your home into cash. The equity that built up over years of home mortgage payments can be paid to you.
I won't go into the lengthy details, but here are some key benefits:
1. To qualify, you must be 62 years of age or older and this must be your primary residence.
But unlike a traditional home equity loan or second mortgage, no repayment is required until the borrower(s) no longer use the home as their principal residence. Once the property is no longer your primary residence, the loan must be repaid. This can be done by either refinancing the property or selling it.
Here's an example of how this could work for you. Let's say you own your home free and clear, have a small mortgage balance or wish to downsize to a smaller home worth $500,000. With a reverse mortgage, you could borrow up to $232,000 with the balance being your equity. To qualify for this loan, you do not need to show any tax returns or proof of income. No credit score is required either. Your monthly payment for this $232,000 mortgage is $0 — as long as this remains the primary residence for you or your spouse. Let me repeat that, your monthly payment for the life of the loan remains at $0. Once your property is either refinanced or sold, all remaining equity after repaying loan and accrued interest is passed on to you or your heirs. Loan proceeds are not considered income and will not affect your social security or Medicare benefits. One more benefit, all the proceeds are tax-free and federally insured by HUD.
2. With a reverse mortgage, you can borrow the money in a lump sum or small increments through a line of credit as you see fit.
The loan can be used to pay medical expenses, make home improvements, pay for in-home care, supplement your income and much more.
With access to cash limited today and stock prices down, this may be worth exploring. It's always good to have a cash cushion because you never know when unexpected expenses come up.
When it comes to important decisions like this it's wise to talk with your family, your financial adviser and attorney to make sure this is going to work best for your particular situation and your long term goals. One thing you should avoid is anyone trying to sell you an annual annuity because it's not needed and is a large additional expense. It's also a good idea to speak with a few lenders to make sure you are getting the best deal.
Steven Hyman is the Broker & Owner of Century 21 Sunset Properties. He can be reached at 650.726.6346 or at www.century21sunset.com.
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Print written by Frank Schulte-Ladbeck on Thursday, May 7, 10:53AM
My wife reminded me last night that when we were looking for a home, the first thing I did was plan out where the vegetable garden could be. My next priority was what I could do with the garden beds once I found the ideal spot. The design of the house came last on my list. She joked that I did not want a home; I wanted a garden. Blessed with temperate weather here in Houston, TX, I've been able to plant a tomato crop, and harvest onions, kale, peas, chard and beans.
Recently, I came across an article in USA Today about seed sales increasing, mainly due to the concerns that people have over their finances. Growing your own vegetables and herbs may save you money, but more importantly, it provides you with healthy food that is quickly available.
It's all about the herbs
Herbs give the most satisfaction to novice gardeners. My two-year-old daughter and thirteen-year-old son know where I keep different plants, and they are frequently sent off to gather herbs. My wife thinks it is strange that I know the ages of different herbs. Call me crazy, but I plan to have a big party this year, when my oregano is turning ten! Herbs do not always need the care and attention that vegetables need; they can thrive when other plants suffer.
A fresh herb chopped and thrown into a dish at the last moment can create an array of flavors that will dance on your tongue. If you have seen the price of a fresh herb, you will know that growing your own is much cheaper than buying a few sprigs in the store. I love to make sauces with my herbs too, so I think these hardy little plants can be the best buy for a person beginning to grow their own food.
Growing your own veggies
Vegetables need more care, but simple organic growing methods can be cost effective. You need to water them more, and you need to check for pests in any form. My two year old likes picking a tomato when it's green; she will not let them go red.
One easy to grow vegetable is green onions. Those bunches that you buy in the store can be placed in the ground. You can snip off leaves when needed, or you can harvest them whole. You may find that one plant will provide all that you need for one dish. If you are planting seeds, it may be better to start them in a flat. Let them grow in a protected environment before setting them in the garden.
Currently my kitchen window sill is filled with various types of pepper plants. I'm waiting for the last freeze in March before they go out. I also have my okra at another window. When planting, have a good healthy soil and cover the plant bases with mulch to cut down on watering. Your local nursery may have a good book on organic techniques, and they should carry the vegetables that will thrive in your area. For example, Houston is not asparagus country, but there is a variety that does grow really well here; in fact it can take over a bed. That is where local knowledge is important.
With spring coming soon, this may be the best time to start the seedlings indoors, so you will be ready to have them in the ground when the last frosts have passed. I found a good selection of seeds at my local hardware store this morning, but I also go to a store that specializes in carrying a large variety of seeds and organic fertilizers. I imagine that there is one in your city too. Herbs provide the greatest return on investment for the beginner, but you may find that other plants can be just as good when you take the time to learn how to grow them.
Frank Schulte-Ladbeck, is a Houston-based Professional Real Estate Inspector
Print written by Amy Le on Friday, March 20, 4:36PM
The S&P/Case-Shiller U.S. National Home Price Index plunged 18.2% during the final quarter of 2008, the biggest annual decline in the closely watched index's 21-year history. Separately, for the month of December alone the Case-Shiller 20-City Composite Index fell 18.5% compared with the previous December, also a record decline.
The seven worst performing cities in terms of year-over-year declines continue to be from the Sunbelt, reporting negative returns in excess of 20%. Phoenix was down 34.0%, Las Vegas reported -33.0% and San Francisco fell 31.2%. Denver, Dallas, Cleveland and Boston faired the best in terms of annual declines down 4.0%, 4.3%, 6.1% and 7.0%, respectively.
Metropolitan Area Home Price Index 1-year change (%)
• Atlanta, GA: -12.1%
• Boston, MA: -7.0%
• Charlotte, NC: -7.2%
• Chicago, IL: -14.3%
• Cleveland, OH: -6.1%
• Dallas, TX: -4.3%
• Denver, CO: -4.0%
• Detroit, MI: -21.7%
• Las Vegas, NV: -33.0%
• Los Angeles, CA: -26.4%
• Miami, FL: -28.8%
• Minneapolis, MN: -18.4%
• New York, NY: -9.2%
• Phoenix, AZ: -34.0%
• Portland, OR: -13.1%
• San Diego, CA: -24.8%
• San Francisco, CA: -31.2%
• Seattle, WA: -13.4%
• Tampa, FL: -22.0%
• Washington, DC: -19.2%
Source: Standard & Poor's and Fiserv
Data through December 2008
Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@HomeFinder.com.
Print written by Amy Le on Friday, March 20, 2:49PM
Lately, it seems like every time I turn on the television or open a newspaper there's another big company announcing plans for massive layoffs. And for many people, the headlines have become their reality. I personally know a handful of people who lost their jobs this year and a handful more who are concerned they are the next to be let go. With a cloud of uncertainty looming over our heads, it's no wonder most people aren't out spending on big ticket items like cars and houses.
But for some retailers, waiting out the economic downturn isn't the answer. To help lure consumers off the sidelines, some retailers have decided to up their promotional antics by offering 'risk-free guarantees.' I'm sure you've all seen the Hyundai ads by now. HYUNDAI AD: 'Now, finance or lease any new Hyundai, and if you lose your income in the next year, return it to us with no impact on your credit.' Hyundai recently tacked on extra guarantees to the promotion. If you lose your job, they'll cover your loan payments for up to three months. Meaning, you keep the car.
Toll Brothers' mortgage protection plan
The executives over at Toll Brothers Inc., a luxury home builder, must have been watching these ads too. Earlier this week, the company announced a promotion they're calling their 'mortgage protection plan.' But unlike the Hyundai promotion, you can't give back the house if you lose your job. If you do get laid off, Toll Brothers will cover your mortgage payment — up to $2,500 for six months. The mortgage insurance may also cover up to six months of principal, interest, homeowner's insurance and real estate taxes. Toll Brothers, however, won't pay your mortgage if you're self-employed or own part of the company, or if you lose your job due to misconduct, disability or hospitalization.
The policy is also set up to pay out a percentage of a household's lost income if there are multiple borrowers. For example if one spouse loses their job and contributes 50% to the household income, the mortgage protection plan would pay 50% of the couple's housing costs.
To be eligible for the insurance payouts, homeowners need to have worked at least 30 hours a week and been continuously employed for 12 consecutive weeks before losing their job. Another stipulation of the Toll Brothers' promotion is that the mortgage insurance policy is being offered to people who only finance their homes through the company's TBI Mortgage unit.
Now if Toll Brothers can just guarantee that your new home won't be worth less in six months, then this would be a deal too good to pass up.
Got hot local housing tips or a story you want to share? Contact Amy Le at openingdoorsblog@HomeFinder.com.
Print written by Amy Le on Wednesday, February 18, 10:41AM
As more abandoned buildings and foreclosed signs dot the streets of neighborhoods across the country, two U.S. metro areas have been hit hardest by the housing market meltdown. Forbes.com recently reported that Las Vegas edged out the Detroit for the title of America's most abandoned city.
Atlanta came in third, followed by Greensboro, N.C., and Dayton, OH. Their rankings, a combination of rental and homeowner vacancy rates for the 75 largest metropolitan statistical areas in the country, are based on fourth-quarter data released Feb. 3 by the Census Bureau. Each was ranked on rental vacancies and housing vacancies; the final ranking is an average of the two.
Metro declines and growth
Rapid industrial decline over the last decade has paralyzed the economic growth of cities like Detroit and Dayton. Others, like Las Vegas and Orlando, are mostly victims of the recent housing down turn. Boston and New York are among the lone bright spots, while Honolulu is the nation's best with a vacancy rate of 5.8% for homes and a scant 0.5% for rentals, according to Forbes.com.
Forbes reports that empty neighborhoods are becoming an increasingly daunting problem across the country. The national rental vacancy rate now stands at 10.1%, up from 9.6% a year ago; homeowner vacancy has edged up from 2.8% to 2.9%. Richmond, Va.'s rental vacancy rate of 23.7% is the worst in America, while Orlando's 7.4% rate is worst on the homeowner side. Detroit and Las Vegas are among the worst offenders by both measures — the Motor City sports vacancy rates of 19.9% for rentals and 4% for homes; Sin City has rates of 16% and 4.7%, respectively.
From boom to bust
Detroit rose to fame as an automobile giant when Henry Ford built his first Model T automobile in 1904. William Durant, the Dodge brothers and Louis Chevrolet quickly followed, elevating Detroit to prominence as the nation's automobile capital. Although many of these factories have since relocated, Detroit still remains the hub for General Motors, one of the world's largest car makers. Many economist blame rapid suburbanization, outsourcing of manufacturing jobs and a lack of economic diversity for the city's precipitous decline.
While Las Vegas is uniquely different from Detroit, it is still yet to be seen if the 'Entertainment Capital of the World' will be able to fully recoup from the housing market bust and regain its title as the fastest growing city in the country.
Read more about Detroit and Las Vegas housing market.
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