It's a great time to buy a house. Interest rates are still incredibly low and available homes are abundant. Personally, I can see the market is improving and business has really picked up. What great news!
A lender sent this article to me today and thought I'd share.
Homeownership Makes $ense
Bring on the buyers! At last, the housing market is beginning to make sense again. The ownership line is finally crossing over the rental line on the great Homeownership graph.
It is now more expensive to rent than to buy a home in 72% of major metropolitan areas across the US, according to the Trulia Rent vs. Buy Index released Monday.
This is due to rising demand for rentals and falling home prices combined with low interest rates.
Pete Flint, chief executive and co-founder of Trulia says: "Since the start of the Great Recession, many former homeowners have flooded the rental market… Following the principles of supply and demand, renting has become relatively more expensive than buying in most markets."
The index compared the median list price and rent paid for a two-bedroom home in 50 cities. It then assigned a price-to-rent ration to each city with 15 signifying a buyer's market and 21 or more signifying a renter's market. The space between the two numbers signifies a balanced market.
The cost to rent includes rent and insurance. The cost of ownership includes mortgage principal and interest, closing costs, property taxes, hazard insurance and any homeowner association dues.
Not surprising, the most affordable markets are Las Vegas and Miami where the price-to-rent ration is 6 and where the foreclosure rates have topped the charts. Las Vegas was atop the foreclosures list in Q3 with one in every 25 homes was in foreclosure.
The index reported that homeownership was cheaper in the metro areas of San Francisco, Seattle, New York and Kansas City, MO, all of whom had price-to-rent ratios over 21.
Other metros like Oakland, Sacramento, Los Angeles, Miami and Phoenix are experiencing elevated rates of unemployment or foreclosures and close economic centers with projected job growth are still more affordable to renters.
This is truly great news for the Housing Industry.
Monday, January 31, 2011
Monday, January 10, 2011
Foreclosure and Short Sale Consequences
Foreclosure is an extreme measure when an owner is "upside down" on their mortgage. It should be the last resort when you are unable to make your mortgage payments as the consequences can stick with you for many years. This is a wonderful article describing foreclosure and short sales.
Consequences of Defaults and Foreclosures
by Carla Hill
The economy has put a strain on thousands of households across the nation. In these tough times, many homeowners are struggling in the face of foreclosure. What are the consequences of defaulting on your loan? And what can you do to prevent this loss?
One of the most startling impacts of a foreclosure appears on one's credit report. Your credit score may plummet by 200 to 300 points. In this economic climate, where credit lending standards are already tightened, you may then find it difficult to do everything from buying a car to renting an apartment. What's worse is that the notation of foreclosure stays on your report for up to seven years.
Next, you may owe the lender money. They backed a loan on a home worth X amount. If they sell your home at foreclosure for less than that amount, you may be responsible for the difference. Many states have laws protecting you against this action, but speak with an attorney to find out for what you may be liable.
Lately, after the sudden drop in property values in certain markets, investors have been guilty of strategic defaults. This is when an investor purposely defaults on a property, because the time it will take for them to recoup their money is perceived as too great. A word to the wise: courts are now ordering deficiency judgements in some cases, where the investor must pay the lender back their losses.
There really is no winner in a foreclosure. With homeownership comes increased family stability. The loss of a home can be a trying time on all members of the family. Beyond your own family, a foreclosure can mean lowered property values for your entire neighborhood.
Avoiding default and foreclosure is not always possible. If you are not able to make your payments, be sure to be honest with your lender. They may be able to present you with an alternative. In addition, here are a few tips to get you thinking.
1. Short Sale. A short sale occurs when a borrower is unable to pay their mortgage loan. Both the homeowner and lender consent to a short sale, which means selling the home at a moderate loss, avoiding foreclosure and its associated frees and havoc on credit reports.
2. Talk to your lender. They may be able to offer you programs, refinancing, or counseling that can help you avoid losing your home. Most banks don't want you to foreclose, as it would mean they take a loss.
3. Selling if not underwater. If you are not underwater on your home loan, meaning you don't owe more than you can sell for and owe, then now is the time to employ a real estate agent and get your home sold. Downsizing or even renting is a better option than ruining your credit for the next seven years.
4. Budgeting. There are non-necessities that can be cut out of your expenses. Cut down and live as simply as possibly. You may have more money than you realized!
5. Financial counseling. Defaulting is serious business. You would be wise to meet with a financial counselor to see if they can help you avoid losing your home.
6. Refinancing or loan modification. Your bank or lender may be willing to allow you to refinance. This can translate into lower monthly payments.
The bottom line is this. Defaulting on your mortgage has severe consequences. Try your best to balance finances before your mortgage becomes an issue. And be honest and upfront with your lender in the event that a default is likely.
Published: January 6, 2011
Consequences of Defaults and Foreclosures
by Carla Hill
The economy has put a strain on thousands of households across the nation. In these tough times, many homeowners are struggling in the face of foreclosure. What are the consequences of defaulting on your loan? And what can you do to prevent this loss?
One of the most startling impacts of a foreclosure appears on one's credit report. Your credit score may plummet by 200 to 300 points. In this economic climate, where credit lending standards are already tightened, you may then find it difficult to do everything from buying a car to renting an apartment. What's worse is that the notation of foreclosure stays on your report for up to seven years.
Next, you may owe the lender money. They backed a loan on a home worth X amount. If they sell your home at foreclosure for less than that amount, you may be responsible for the difference. Many states have laws protecting you against this action, but speak with an attorney to find out for what you may be liable.
Lately, after the sudden drop in property values in certain markets, investors have been guilty of strategic defaults. This is when an investor purposely defaults on a property, because the time it will take for them to recoup their money is perceived as too great. A word to the wise: courts are now ordering deficiency judgements in some cases, where the investor must pay the lender back their losses.
There really is no winner in a foreclosure. With homeownership comes increased family stability. The loss of a home can be a trying time on all members of the family. Beyond your own family, a foreclosure can mean lowered property values for your entire neighborhood.
Avoiding default and foreclosure is not always possible. If you are not able to make your payments, be sure to be honest with your lender. They may be able to present you with an alternative. In addition, here are a few tips to get you thinking.
1. Short Sale. A short sale occurs when a borrower is unable to pay their mortgage loan. Both the homeowner and lender consent to a short sale, which means selling the home at a moderate loss, avoiding foreclosure and its associated frees and havoc on credit reports.
2. Talk to your lender. They may be able to offer you programs, refinancing, or counseling that can help you avoid losing your home. Most banks don't want you to foreclose, as it would mean they take a loss.
3. Selling if not underwater. If you are not underwater on your home loan, meaning you don't owe more than you can sell for and owe, then now is the time to employ a real estate agent and get your home sold. Downsizing or even renting is a better option than ruining your credit for the next seven years.
4. Budgeting. There are non-necessities that can be cut out of your expenses. Cut down and live as simply as possibly. You may have more money than you realized!
5. Financial counseling. Defaulting is serious business. You would be wise to meet with a financial counselor to see if they can help you avoid losing your home.
6. Refinancing or loan modification. Your bank or lender may be willing to allow you to refinance. This can translate into lower monthly payments.
The bottom line is this. Defaulting on your mortgage has severe consequences. Try your best to balance finances before your mortgage becomes an issue. And be honest and upfront with your lender in the event that a default is likely.
Published: January 6, 2011
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